IRELAND - Irish defined benefit (DB) schemes have seen their liabilities decrease in March despite a drop in value for European equity portfolios, said Aon Hewitt.

The consultancy pointed to the strengthening euro as a further reason for losses on the global equity market, saying this led to portfolios losing 3.3% on average.

Denis Lyons, senior investment consultant at Aon Hewitt, said: "Those pension funds with a more broadly diversified asset allocation have outperformed over the last quarter."

However, he said that, despite falling equity returns, Irish schemes' funding ratios would be likely to see a "modest" improvement.

"Rising bond yields have led to a decline in the value of schemes' liabilities," he said.

According to a separate study by Rubicon Investment Consulting, managed funds saw a 2.4% decline in value over the course of last month, with Merrion Investment Managers losing 3.5%, compared with Standard Life Investments and Canada Life's funds, both losing 1.8% and seeing the smallest loss.

The consultancy noted that five-year returns did not look much stronger, with losses of 1.8%.

It said: "Irish group pension managed fund returns over the past 10 years have been a disappointing 1.5% per annum on average, well below the Irish inflation rate of 2.3% per annum over the same time horizon."

In fact, over the 10-year period, only two of the 10 examined managed funds managed to outperform inflation.

Figures from Aon Hewitt examining individual funds in more detail showed that the highest return garnered was 0.6% by one of Standard Life's medium-volatility offerings.

Of the dozen funds in the medium-volatility category, nine saw assets decline, while two saw no change in value.

Overall, medium-volatility investors witnessed the smallest losses of only 1%, with medium/high volatility funds declining by 2.1% compared with high-volatility funds' decline by 1.8%.