THE VALUE of assets in Irish pension funds fell by 23 per cent last year to €66.7 billion. Despite the value of contributions made to funds during 2008, turmoil in investment markets wiped almost €20 billion off the worth of pension fund assets over the 12 months. As a result, the value of Irish pension fund assets has retreated almost to 2004 levels.

The Irish Association of Pension Funds (IAPF) said the findings in its annual asset allocation survey showed a lower loss “than might have been expected”. It attributed this to strong cashflow into pension funds last year and/or changes in investment strategy by fund managers.

IAPF director of policy Jerry Moriarty said the outcome “underlines” the need not to do anything in the budget to cause further damage to the retirement prospects of pension scheme members.

Assets in defined contribution (DC) schemes have doubled in two years despite the downturn in investment performance. At the end of 2008, DC schemes accounted for 27.3 per cent of all assets under management, with a further 1.9 per cent in Additional Voluntary Contribution schemes.

There were significant changes in asset allocation during 2008 as stock market performance worsened. At the end of the year, equities accounted for less than half of assets in funds (47.8 per cent) compared to two-thirds a year earlier. In part this reflects falling share prices which would reduce the weighting of shares in portfolios.

However, IAPF chairman Patrick Burke said market movements alone would only have brought the proportion of equities in funds down to 54 per cent. “We must surmise the figure reflects a decreasing appetite for equities.”

The proportion of funds invested in bonds rose to 25.6 per cent from 18.5 per cent a year earlier. The amount held in cash nearly trebled to 11.4 per cent from 3.8 per cent at the end of 2007.