IRELAND - Irish pension funds saw returns fall by nearly 2.5% over the course of 2011, according to figures released by Aon Hewitt.
The decline comes despite a strong stock market performance in December that saw North American equities rally by more than 4%.
Over the same month, Irish pension schemes saw returns of 3.2% on average, the consultancy said.
Senior investment consultant Betty O'Reilly said the US equity rally was largely the result of the country's improving economic outlook.
"Gains for euro-based investors were further accentuated by currency appreciation against a weakening euro," she added.
But she warned that December's boost would not necessarily improve funding at Irish defined benefit (DB) schemes - with bond yields for core, 'safe haven' euro-zone countries falling even further.
"Irish [DB] funding levels fell slightly over the month as the rise in asset values generated by the recovery in equities was offset by a fall in core euro-zone bond yields and consequently a rise in pension scheme liabilities," she said.
Despite last year's losses, average three-year returns for the country's schemes still reached 9.3% - a figure "distorted" by the poor returns in 2008 in the wake of the banking crisis, according to O'Reilly.
She said: "The five-year return on the index is down 3.3% on an annualised basis, while 10-year returns are 2% per annum."