PENSION FUND losses at listed Irish companies amounted to €5.7 billion last year, according to a report published yesterday.

Companies will be required to reflect the losses in their accounts which “will reduce balance sheet strength, which leads to consequences for several areas of the business, including capital expenditure decisions, loan covenants and credit rating decisions”, according to David O’Sullivan of Mercer who compiled the report.

Pension liabilities of Irish listed companies now amount to 61 per cent of the total stock market capitalisation of those same firms – compared to 21 per cent just a year ago.

Mercer says that this will make pension plan obligations one of the main financial risks for Iseq companies.

Where the average occupational pension fund of a company on the Irish Stock Exchange was nursing just a 10 per cent shortfall in funding at the end of 2007, that has almost quadrupled to 39 per cent.

The estimated aggregate deficit of the funds now stands at €7.6 billion, up from €1.9 billion.

“It is generally accepted that the vast majority of plans now fail to meet the minimum statutory test for Irish pension schemes,” said Mr O’Sullivan.

“While it is difficult to set a reasonable estimate for the absolute level of contributions that will be required in 2009 and beyond, companies are likely to have to make significant additional contributions to correct this situation.

“This is of course exacerbated by the fact that many companies are experiencing difficulties themselves and may not be able to afford the contributions required,” he said