IRELAND - The Irish Aviation Authority (IAA) has admitted its pension deficit is the "most significant challenge" to its finances in 2009, as its pension shortfall has almost trebled to €146.6m in 2008.

Figures from the IAA's 2008 annual report showed the value of the pension scheme's assets fell from €314m to €213.3m last year, causing the €56m deficit recorded at the end of 2007 to jump to €146.6 by the end of 2008.

The IAA currently operates two defined benefit schemes, the Irish Aviation Authority Staff Superannuation Scheme 1996 for those employed before 1 April 2008 and the Irish Aviation Authority Staff Superannuation Scheme 2008 for those employed after this date.

However, the combined liabilities of €380.8m and the decreased asset value of €213.3m, recorded on the balance sheet, resulted in a "negative net equity or shareholders' deficit" of €27.6m.

In his review of the year, Eamonn Brennan, chief executive of the IAA, confirmed an actuarial valuation of the fund is being conducted as of 1 January 2009, even though the next triennial valuation is not scheduled until March 2010.

Brennan admitted in the report: "Having regard to the disastrous equity returns during 2008 it is expected that a significant funding deficit will exist. Discussions to address the underfunding of the pension fund with all stakeholders, including the Departments of Transport and Finance, are ongoing."

The authority confirmed the increase in the deficit was "due almost exclusively to the fall in the value of pension scheme assets caused by the collapse in global equity markets during the year".

As at the end of December 2008 the asset allocation of the pension scheme was 64.27% in equities, 21.58% in bonds, 7.35% in property and 6.8% in cash and other investments.

Brennan added: "The pension deficit is the most significant challenge we face financially in 2009 and significant steps will have to be taken to address the issue in 2009, including the introduction of a staff contribution and changes in benefit levels."

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