Domestic pension funds fall 20% in Q3

THE fall in global asset values have wiped billions off the value of Irish pensions this year.

Hewitt Associates 2008 pooled pension fund survey of pooled funds available to pension and AVC investors in the Irish market shows they are down 20% for the third quarter.

“2008 is proving a very difficult year for pension investors with managed fund returns down over 20% in 2008. The Irish equity market was the biggest loser to the end of September with all funds in the survey down more than 40%.

“In addition, with losses gathering pace in October, the ISEQ lost a further 20%. Year to date returns on Irish equity funds are likely to be in excess of -60% for the first 10 months of the year,” said Betty O’Reilly, investment consultant at Hewitt.

Bonds and cash have been the only place to be this year, both displaying positive returns.

“Property returns had a dismal quarter, with the average return -14.3%, the third consecutive negative quarter for property. This dragged year-to-date returns on Irish property to -23.3%. Recent declines in Irish property mean that commercial property values are now back at levels seen in December 2005 with the likelihood of even further downside.” said O’Reilly.

With the increased volatility in markets the dispersion of returns between managers is increasing.

Last quarter in global equities the top performing active manager slot was shared by Setanta and Eagle Star both losing 4.4%, while the worst performing manager (Newton/Mellon) lost 17.8% over the same three months.

“For October we are expecting managed pension funds to have experienced their worst month’s return for the year. Indications at this stage are that managed funds will have lost in the region of 10% of their value in October, which will bring year to date returns to -30%,” O’Reilly said.