Irish defined benefit pension schemes have reduced their equity allocations by almost a third in the past three years.

Equity allocations for Irish defined benefit schemes fell to 27pc this year, compared to 39pc in 2017.

This is according to the 2020 ‘European Asset Allocations’ report from Mercer.

The report finds that allocations to fixed income investments like corporate bonds over the same period have risen to 50pc from 48pc.

The allocation to assets like property, private equity and infrastructure has doubled to 22pc from 11pc.

Olivier Santamaria, head of investment consulting for Mercer Ireland, said: “With investors facing high levels of uncertainty for the rest of 2020 and pending the outcome of the tug of war between poor economic fundamentals on the one hand and financial markets expectations of a strong recovery on the other, risk management remains a key priority.”

“We expect schemes to continue focusing on building more robust portfolios through increased diversification and better matching of the liabilities,” he added.

The trend of reduced equity allocations is reflective of investors across Europe and the UK, with the average equity holding falling to 22pc this year from 25pc last year.

Instead, investors have increased allocations in 2020 to growth-oriented fixed income – up 10pc, private equity, which is up 6pc and real assets – up 4pc, when compared to 2019, in an attempt to diversify schemes and deliver greater returns.

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