Pension fund investment values fall
Mercer’s survey of 25 global investment managers found only one managed to break even over the three months to September. Newton Investment Management added 0.8%, while KBC Asset Management propped up the table after registering a 5.2% decline over the same period.
Mercer Investment Consulting partner Tom Geraghty said struggling equity markets, coupled with outperforming bond markets, had resulted in a difficult time for pension funds. The FTSE World index, a benchmark for the performance of equity investments, gained 4.2% over the 12 months to October, but the 10-year yield on eurozone government bonds fell from 4.9% to 4.45%. “The end result is that this does little to help the financial position of many pension plans,” said Mr Geraghty.
Although Irish pension fund assets had grown 5.9% in the year to October, falling yields meant the value of most funds’ liabilities had increased.
Mr Geraghty said there was a continuing trend among Irish pension fund trustees to hire international managers. He estimated that up to 20% of Irish pension assets were currently being handled by managers based outside the country. “The trustees of Irish pension plans are now fishing in a much wider pool,” he said.
But this was not all bad news, as it increased the choice and availability of products for pension trustees and enhanced the decision-making process. Mr Geraghty also said there was evidence that some Irish-based fund managers were “very successful” in their efforts to win business abroad.
Meanwhile, the Pensions Board, the agency charged by the Government with improving pensions awareness, launched a guide aimed at pension fund trustees yesterday.
“A key objective of the Pensions Board is to ensure the security of pension schemes and to protect the interests of scheme members,” said Pensions Board chief executive Anne Maher.
The guide contains an overview of pensions and sets out the responsibilities of fund trustees.
