ALMOST HALF of Irish defined benefit (DB) pension schemes are closed to new entrants, according to the findings of the latest asset allocation survey from benefits consultant Mercer.

The situation is not as bad as in the UK, where the survey points to 70 per cent of DB schemes being closed, but is in sharp contrast to the rest of Europe.

Irish institutional investors remain more heavily invested in equities than their European peers, with a lower weighting in lower-risk bonds.

More particularly, despite the small size of the Irish Stock Exchange in global terms, Irish investors have a higher average exposure to domestic equities than any of the other countries surveyed across Europe.

There has been a decline in exposure to equities over the past year but this is largely as a result of falling stock prices rather than any decision to reduce holdings.

Between 40 and 50 per cent of Irish survey respondents said they were planning to decrease their exposure to stock markets this year.

The annual survey covers 1,000 schemes in 11 countries across Europe with total assets of about €400 million.

They include all Mercer’s defined benefit clients in Europe, alongside a small number of defined contribution schemes

While the survey results show that Irish investors are least likely to look to alternative investments, this is one of the areas Irish respondents said they intend to examine this year.

Within the sector, Irish funds indicated they were interested in increasing their investment allocation in private equity funds, commodities, infrastructure and forestry – so called beta or tangible areas. However, the most likely change in asset allocation by Irish schemes is an increase in the use of both government and corporate bonds.

Investment in the domestic property sector is likely to fall.

The survey points to a notable adjustment of strategy among more mature funds – especially those closed to new entrants. In both Ireland the UK, closed funds give a 10 per cent higher weighting to government bonds than funds that remain open to new members.

The turmoil in pension schemes across the region is reflected in the finding that 73 per cent of all respondents either reviewed their investment/risk strategy last year or plan to do so this year.

In Ireland, the requirement to meet Pensions Board standards in respect of scheme solvency is a significant factor in such decisions. About 90 per cent of Irish defined benefit schemes are now understood to be addressing funding gaps.

Active members – those still working for the company sponsoring the defined benefit scheme – account for 51 per cent of scheme members in Ireland, notably higher than in the UK. Pensioners make up 30 per cent with the balance, 19 per cent, accounted for by deferred members – those who have left the sponsoring employer but have not yet retired.

A separate survey of broker sentiment carried out by Lansdowne for insurance group Friends First shows that insurance brokers believe Ireland will pull itself out of the recession faster than the public does.

The survey was conducted on 120 brokers and 1,000 members of the public following the emergency Budget on April 7th.

It revealed that 55 per cent of the public thinks the recession will last for three or more years, while 43 per cent of brokers were more optimistic, saying it would end in one to two years.

Friends First life assurance sales and marketing director Eunan O’Carroll said: “I think this reflects the fact that brokers see business opportunities in the current climate.”

Brokers reported a decline in business over the last three months, but 48 per cent still expect business volumes to increase over the next 12 months.