PENSION fund losses have been highest in Ireland, Britain and the Netherlands, a new study on retirement schemes across Europe has found.

Pension fund losses have been blamed on their overexposure to investments in shares and property.

Losses in defined benefit schemes have been so great that it would not be surprising if the average fund could only afford to pay out less than 50 per cent of the accrued benefits if the pension funds had to be closed down, a new report by Aon Consulting has found.

Big increases in the cost of funding defined benefit pensions along with the turmoil in equity markets have put the long-term affordability of these schemes in question.

A recent Government memo said that 90 per cent of defined benefit pensions, where employers promise to pay a set level of income on retirement, were failing to meeting minimum statutory funding obligations.

Aon Ireland consultant Andrew Krawczyk said: "The availability of cash to replenish pension scheme deficits in the short term is also a huge concern in the current economic climate."

Mr Krawczyk said recent changes announced by the Department of Social and Family Affairs, where active members of a pension scheme are to be given more priority if a scheme is wound up because a company is insolvent, will benefit defined schemes.

He added that the demographics favour Ireland as it has the youngest age profile in its workforce out of the countries surveyed.