Pension funds still have ground to make up despite 10% gains last year

IRISH pension funds are still under pressure to make up the losses of earlier years.

Despite gains of over 10% in the past year, funds over a five-year period are still in negative territory, figures from Mercer Investment Consulting show.

Over a five-year period, the average managed fund returned -0.6% per annum.

Pension specialist Tom Murphy of Mercer said the environment for pensions is not getting any better.

As performances against the bond market are made in the coming months it will become obvious that more Irish pension funds are in deeper trouble than before.

That gap will also affect the kind of product being offered to workers in the year ahead, he warned.

Leading the pack of Irish fund managers was BIAM’s Managed Fund which was up by 2.5% per annum with New Ireland just short of that at a 2.4% yearly growth over the five years.

KBCAM with a return of -3% per annum was the under-performer over the five-year period.

Mercer’s figures show the average Irish Pension Managed Fund gained 4.8% over the fourth quarter of 2004. That gave a full-year return of 10.4%, according to Mercer Investment Consulting.

Eagle Star’s Balanced Fund led the way over the quarter with an increase of 5.6%, followed by AIBIM’s Managed Fund with 5.4%.

This compared to the average managed fund return of 4.8%. The laggard over this period was Davy’s Exempt Pension Managed fund, which returned 3.5%.

Over the 12 months, AIBIM’s Multimanager Fund came out ahead with a 12.8% gain.

It was followed by Irish Life’s Managed Fund which was up 12.4%. Those figures compare with the average managed fund return of 10.4%.

KBCAM with a return of 7.1% and Acorn Life with 9.5% lagged behind their competitors.

While Irish equities were again the top performing equity market over the final quarter of 2004, with financial stocks driving the 11% gain, Irish pension funds are still under pressure to deliver.

“On first glance, it would appear that pension funds have experienced better times in 2004.

“The average managed fund increased by 10.4% during the 12-month period and certainly such double digit growth in assets is extremely welcome.”