Results show flat performance by managed funds in pension sector

PENSION funds face renewed solvency pressures if current stock market trends continue, warns a top consultant.

Latest figures from Coyle Hamilton for the past three months, until the end of July, have shown a flat performance by managed funds across the entire pension sector, when the country’s major funds returned -0.2% on average for the period.

The best performer returned +0.8% and the lowest figure was -1.3% over the period.

The average for 12 months was barely in double figures, +10.3%. Over three years, average return is still in negative territory said Stephen Lawlor, pensions consultant with the Coyle Hamilton Group.

However he said it may soon return to the black as some of the bad months of 2001 and 2002 begin to fall out of the calculation and be replaced by, hopefully, strong positive returns,

Mr Lawlor said the “political and economic” uncertainties made it impossible to call the outturn for the year.

“If sanity were to return to the political scene and the world got the leadership it deserved then the markets would pick up. It is ironic that overall we are in a situation where we could be a more prosperous world than we ever have been.”

The continuing margin between the best and worst performers, particularly over three years plus, emphasise the importance of fund manager selection.

Over three year Bank of Ireland Investment Managers were ranked the best performing fund.

By contrast main rival AIB’s investment arm still disappoints and was ranked l3th out of a total of 17 funds.

Over five years isn’t much better and overall the AIB performance in pension fund terms has been way below its Bank of Ireland counterpart, even when the comparison is across 10 years.

Over that timespan AIB is still ranked 13th (7.5% up) while Bank of Ireland is third with a return of 10.2%. Top ranked is Montgomery Oppenheim with a return of 12.3% over 10 years followed by New Ireland in the number two slot at 10.6%.