IRELAND - Irish pension managed funds fell 2.5% over the last year, to record the first negative end to a year since 2002, Hewitt Associates has revealed.

The Hewitt Managed Fund Index - a benchmark for all Irish pension managed funds - reported a loss of 1.4% in December to bring losses in the second half of the year to 7.5%.

Pension and investment consultancy Hewitt said these losses wiped out the strong performance of the first six months which registered gains of 5%, following four years of consecutive double digit growth.

Although the survey is still waiting finalised prices from investment managers, Hewitt said it expected the vast majority of funds would have finished 2007 at prices lower than at the start, although it admitted there may be "one or two exceptions".

It said the downturn in equity markets, following the subprime mortgage crisis in the US in the second half of the year, is largely to blame for the poor results.

In particular, it said Irish equities weighed heavily on returns as it accounts for approximately 15%-20% of a pensions-related managed fund, and yet the market fell almost 25% over the year.

That said, Hewitt suggested bond markets may have provided some relief to pension funds as yields rose around 0.5% over the year, which it said means for "most relatively immature defined benefit pension schemes funding positions should have improved over the year, by 5-10%".

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