Irish pension funds recoup 5pc of 2008 losses, says OECD
NPRF 'worst performer' due to overexposure on shares and property
FOLLOWING a dire performance in 2008, Irish pension-fund assets recovered around 5pc of the losses in the first half of the year, the Organisation for Economic Cooperation and Development (OECD) said in a report published yesterday.
In June this year the OECD reported that Irish pension funds notched up the biggest losses in the developed world during 2008, as retirement funds here collapsed spectacularly because they are over-exposed to shares and property.
In its updated report, the OECD also pointed out that the National Pension Reserve Fund (NPRF) experienced the worst performance of any sovereign or national fund within the OECD group, shedding 30.4pc of its value last year.
The next worst performance came from New Zealand, which had a loss of 26.2pc followed by Norway and France, whose national pension funds shed around 25pc of their value.
The OECD said the impact of the crisis on investment returns varied greatly between countries but has been worst among public pension reserve funds where equities or shares represented a large part of total assets invested.
The Irish National Pension Reserve Fund was the most exposed to equities in December 2008, at 59.8pc of total assets, followed by New Zealand (53.8pc), Norway (50.8pc) and France (49.3pc), the OECD said.
At the other extreme, public pension reserve funds in Spain and the United States experienced positive returns as they were fully invested in bonds in 2008.
The OECD said funds have also come under pressure as governments have turned towards them to help them alleviate the impact of the financial crisis, noting that the Irish Government approved the use of 25pc of the reserve fund assets to recapitalise our domestic banks.
Earlier this year the NPRF said that its €7bn commitment to the banks had been met by €4bn of its own funds and by front loading €3bn worth of annual contributions from the State to the pension reserve fund.
Established in April 2001, the NPRF is designed to meet as much of the costs of social welfare and public service pensions as possible, from 2025 onward.
Manager
The National Treasury Management Agency was appointed as manager of the Fund for ten years until 2011.
At the end of 2008 the fund's market value was €16.1bn and after growth of 1.3pc over the first six months of 2009, and receiving €3bn in front-loaded annual contributions, its value at the end of June this year amounted to €19.1bn.
This gave it an annual growth rate of 0.6pc since inception.
- Pat Boyle
Irish Independent
