IRELAND - Irish pension funds lost €27bn in 2008, following a final fall of 3.1% in December, Rubicon Investment Consulting has revealed.

The firm's end of year survey of 10 group managed pension funds in 2008 showed the average managed pension funds dropped 34.8% over the year, with the main driver for the losses being substantial over-exposure to domestic equities.

Rubicon Investment Consulting highlighted that Irish equities dropped 65% in 2008, and at the beginning of the year the average managed pension fund had 14% of total assets in Irish stocks, which resulted in domestic pension schemes losing approximately €4.6bn through this asset class alone.

Overall the survey claimed the total estimated loss for Irish schemes is €27bn, but pointed out defined benefit (DB) schemes have suffered further as liabilities increased by between 5-10% over the year as bond yields decreased.

The average return of Irish managed pension funds in December was -3.1%, however Canada Life/Setanta reported the best result with a yield of -1.5%, closely followed by Irish Life Investment Managers with a return of -1.7%.

However in contrast Hibernian Investment Managers was the worst performer in December with a return of -5.7%, while KBC Asset Management reported a yield of -3.6%, and Merrion Investment Managers returned -3.5%.

Over the fourth quarter Eagle Star produced the best result of -13.6%, followed by Canada Life/Setanta on -14.6%, while Hibernian Investment Managers remained at the bottom of the table with -18.7% against the average return of -16.2%

Over the year to 31 December 2008, Rubicon revealed Hibernian remained at the bottom with a return of -38.8%, closely followed by Friends First/F&C and Irish Life Investment managers, both of which produced a yield of -37.3%, while Eagle Star and Canada Life/Setanta remained at the top with -30.5% and -29.6% respectively.

Meanwhile figures published by Hewitt Associates from the Hewitt Managed Fund Index showed an average fall of -3% in December, and a fall of -3.2% in the Index, with Hibernian remaining at the bottom with -5.7% but with Standard Life Investments Consensus tying with Eagle Life/Setanta for the top spot with a return of -1.5%.

The findings from Hewitt's index of 24 funds tally with Rubicon, with the average fund dropping 15.5% in the final quarter of 2008, and -34.8% over the year, with Hibernian staying at the bottom, but the top spot switching to Davy/Aberdeen with returns of -9.3% in quarter four and -27.3% in 2008.

Betty O'Reilly, from Hewitt Associates, said the December fall reflected a continued fall in equity markets for most of the month, although she highlighted a trend for pension funds to reduce their investment in Irish equities.

She said: "The average Irish pension fund had a weighting of 15% in Irish equities at the start of 2008; while this had declined to 7% by the end of the year, largely through relative price movement, the exposure to Irish equities remains well above the weighting of the Irish Stock Exchange (ISEQ) in the World Equity Index and indeed its weighting in the index of Eurozone equity markets."

Elsewhere, latest figures from Shannon Development, a state government agency, revealed a €29.4m deficit in its €59.7m defined benefit (DB) scheme, almost 50% of the total value of its assets.

Although the figures show that the pension deficit has gradually decreased from €32m in 2006 to €29m in 2007, it also reveals the value of its assets fell by almost €4m over the period from €63.2m to €59.7m.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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