Irish pension funds are too heavily weighed down with local stocks, a Dublin seminar was warned yesterday.

Ireland accounts for less than 1 per cent of global equity markets, but most Irish defined contribution schemes have about 20 per cent of investors' money wrapped up in the Irish stock market, said Evelyn Ryder, senior investment consultant with Hewitt Associates.

Irish managed pension funds fell by an average of 3.8 per cent in 2007, largely due to overexposure to the local equity market, she told the Irish Association of Pension Funds investment outlook seminar.

A 20 per cent stake is impossible to justify, she said, when Ireland accounts for just 0.3 per cent of global equity markets.

Ms Ryder said the imbalance seemed particularly inappropriate in light of the "horrendous year" just experienced by the Irish market, which lost 26 per cent of its value in 12 months.

"When you're looking at it from an investor's point of view, that's too high - it just doesn't make sense," she said. "Twenty per cent is just too exposed to one market. It's not diversified, and it's not a good idea."

Ms Ryder's view was at odds with that of Rory Gillen, director of Merrion Capital. He told the seminar that now was not the right time to exit the Irish market and, at current prices and dividend yield, Dublin represented "excellent value".

Mr Gillen said the Iseq had delivered better returns, and with lower risk, than the major international markets in every decade since 1970. Diversification for its own sake would not increase returns or reduce risk, he added.