Madam, – Your Editorial (June 24th) rightly warned that difficult times lie ahead. A key reason for this is that “financial advisers” and many in the pensions industry in Ireland continually fail to evaluate investment risk.
This has led to the majority of pension funds being very overweight in Irish equities and equities in general. This lack of proper diversification was clearly seen in the recent OECD report on pensions that showed that Irish pensions had fallen 37.5 per cent in 2008 – representing the largest pension fund losses in the world.
This is in marked contrast to the more prudent Germans who only lost 8.5 per cent due to them being more properly diversified with higher allocations to international equities, cash, gold, corporate and government bonds.
If our pensions are to recover in the coming difficult years we need to look to Berlin and not to Boston. With the ECB and German chancellor Angela Merkel warning of the growing risks of inflation, real diversification is essential, now more than ever.
Especially as more than 30 per cent of Ireland’s pensioners live in poverty (on international measures) which is the third highest old-age poverty rate among the OECD countries and well over double the OECD average.