IRELAND - A tax on pension assets in Ireland has been "wasted" according to the Irish Association of Pension Funds (IAPF), which said the 0.6% pensions levy introduced last year has failed to boost employment in the country.

The levy, enacted by the current government shortly after entering office, was meant pay for a jobs initiative, with previous attacks highlighting that it appeared the income was being used to improve the exchequer's balance sheet.

The IAPF renewed its criticism of the levy after new unemployment figures showed a year-on-year increase in those out of work, with chief executive Jerry Moriarty calling on the government to stop making the same mistakes.

Moriarty said the minister for finance Michael Noonan was recently unable to identify any specific jobs resulting from the €465m levy, which he said was "confiscated from workers' pensions".

"He did point to 'tentative signs of an improvement in labour market conditions', but couldn't attribute any directly to the levy, which must be galling for all those employees and pensioners whose incomes have been reduced because of this levy," the chief executive added.

Moriarty further threw his support behind investment in infrastructure, saying increased exposure to the asset class could be mutually beneficial.

"While the primary obligation of pension funds is to invest prudently and for the benefit of their members, the government can provide the structure that would also allow the creation of employment," he said.

He added that this would also help counteract the increasing number of benefits cuts occurring as a result of the pensions levy, with investment preferable to pension savings being "raided".

"We urge the government to be more positive and not to continue with a policy that forces funds, which are already experiencing huge difficulty, to take decisions that worsen the situation of pension savers and some of those in retirement," he said.

In other news, Ireland's pension funds have continued to see positive returns over the first six months of the year despite weaker growth in the second quarter, according to Aon Hewitt's managed fund index.

The consultancy said positive developments within the euro-zone had helped recover some of the losses that occurred in May, with second-quarter returns coming in at -0.6%.

Brian Delaney, senior investment consultant within the Irish office, praised some of the steps taken at the recent summit of euro-zone leaders that allowed for banks to be recapitalised directly by the European Financial Stability Facility.

He added that core euro-zone yields, which had slumped to record lows in May, had since recovered somewhat.

"Irish defined benefit pension schemes will welcome the rise in core and in particular German bond yields, which drive annuity prices," he said.

"The recent rise in German bond yields should help alleviate the stress on scheme funding levels in the near term."

According to Aon Hewitt, managed pension funds in Ireland returned 1.85% in June, with year-to-date returns of nearly 7%.