Diversification Mitigates Impact of Eurozone Crisis for Irish Pension Funds

11 June 2012 (PLANSPONSOREurope.com) - The prospect of increased austerity in Ireland remains a worry but diversification away from Irish assets has mitigated the impact of the Eurozone crisis on pension funds Jerry Moriarty, Director of Policy, at the Irish Association of Pension Funds (IAPF) has told PLANSPONSOR Europe.

The Irish Times reports the European bailout of Spain will proceed without direct aid for the country’s banks, dealing a blow to Dublin’s campaign to ease the terms of the Irish bank rescue.

“It doesn’t really have a huge impact. Irish schemes hold very little Irish debt. The only impact is for the good of the country, the level of austerity measures and how deep the recession is going to be.

“The initial hope was that the Spanish bailout would be done in a way the monies were being provided directly to the banks so they wouldn’t go on sovereign debt whereas in Ireland the money we got from the banking restructure was given to the state and the state gave the money to the banks so it cancelled out the state debt. My current understanding is that what they have planned on doing for Spain anyway so the initial hope was that if they did it in a different way to Spain that would actually help us but that probably won’t happen anyway.

On Irish equities Moriaty said Paddy Power and similar companies that have been good performers but generally Irish schemes do not hold a lot of Irish assets.

“Over the past 10 years particularly larger schemes have diversified away from Ireland and being in the euro allows you to do that in a relatively easy way because you don’t have the currency risk as well.”

PLANSPONSOREurope Staff
editors@plansponsoreurope.com