New Ireland has retained its position as the top performer in unit-linked pensions funds over the 15 and 20-year periods to 2000, according to the ninth annual Irish Times Personal Pension survey.
But Eagle Star displaced New Ireland from the top position over 10 years, producing a spectacular performance by turning an investment of £2,000 (€2,539) per annum (a total of £20,000) into a £65,581 fund at the end of 10 years - a net return or yield of 20.89 per cent per annum. New Ireland outperformed the unit-linked market with compound annual returns after all charges of 14.12 per cent and 15.77 per cent over 15 and 20 years respectively. The worst performers in the unit-linked market were Lifetime over 10 years, with a return of 12.63 per cent; Hibernian Life over 15 years, with a 10.75 per cent return; and Irish Life, which produced 13.92 per cent over 20 years .
In the with-profit pension market, Guardian Life was the clear leader in each of the 10, 15 and 20-year time periods. Scottish Provident produced the worst performance over 10 and 15 years and Norwich Union was the worst performer over 20 years, according to the survey. The Personal Pension Survey, the only survey based on pension fund valuations at maturity after life company charges, is produced for The Irish Times by the independent financial adviser, Financial Development and Marketing (FDM). It compares the values at age 60 of the pension funds of male contributors built up through annual investments of £2,000 over 10, 15 and 20-year periods and invested with the different life companies. Typical pension investments are in mixed funds, either unit-linked managed funds or with-profits funds. The survey seeks maturity results from life companies as soon as the company has been in the personal pensions market for 10 years.
Comparing the best and worst performers in the unit-linked market over the different time spans, the Eagle Star return of 20.89 per cent over 10 years was well ahead of Lifetime, which was the worst performer with a return of just 12.63 per cent.
The best return over 15 years came from New Ireland with an annual return of 14.12 per cent. This compared with a return of just 10.75 per cent per annum from Hibernian, the worst performer over the period. Irish Life was the worst performer over 20 years - its return of just 13.92 per cent compared with the best return of 15.77 per cent from New Ireland. But what do the different levels of return really mean in terms of the value of your pension fund? Over the 10 years to 2000, Eagle Star turned a £20,000 investment into a fund of £65,581. The worst performer over the same time period, Lifetime, only managed to return a fund of £40,747.
Acorn Life (formerly known as NZI Life Ireland) was in second place in the unit-linked market over 10 years, followed by Friends First, Hibernian Life, Scottish Provident, New Ireland, Irish Life and Standard Life. Over the 15-year period the £30,000 (£2,000 per annum over 15 years) investment was turned into a £101,023 fund by the best performer, New Ireland. The worst performer, Hibernian Life, only produced a fund of £74,639 for the pension investor. Friends First was the second best performer, followed by Irish Life and Standard Life. Over the 20-year period there were only two companies in the table, with the best performer, New Ireland, producing a £259,805 fund. Irish Life only generated a fund of £205,422.
New Ireland produced a strong performance - it has now maintained its first position over the 15-year time span for seven consecutive years. But it fell from first to sixth position in the unit-linked market over the 10-year period. New Ireland is a wholly-owned subsidiary of the Bank of Ireland. Eagle Star, formerly known as Shield Life, is now owned by Zurich Financial Services. This year its unit-linked pension range is 10 years old and its 20.89 per cent yield outperformed the worst company in the table by more than 60 per cent. Acorn produced a strong performance in its first appearance in the survey, coming second in the 10-year unit-linked market - its assets are managed by HSBC. During the year the Friends First head of investment Mr Pramit Ghose left the company to take over funds management at the newly merged Hibernian and Norwich Union - which is trading in the Irish market as Hibernian Life and Pensions.
In the with-profit market, Guardian's return of 13.87 per cent per annum over the 10-year period compared with a return of 11.25 per cent from Scottish Provident. After 10 years the Guardian fund was £43,766 compared with a fund of £37,648 at Scottish Provident. Standard Life was the second-best performer, with a 13.52 per cent yield and a fund value of £42,902. It was followed by Norwich Union and Friends First. Over the 15-year period Guardian's yield was 14.85 per cent per annum, while the worst performance came from Scottish Provident with a 13.08 per cent yield. Standard Life was in second place followed by Norwich Union and Friends First.
Guardian produced a return of 16.13 per cent per annum over the 20-year period, generating a fund of £272,090. Norwich Union was the worst performer over 20 years, with a yield of 13.23 per cent per annum and a fund maturity value of £188,253.
But the survey commented again that the "the artificial nature of with-profit yields" has continued to impact on the positioning of companies within the survey table. This has been a feature over a number of years as companies cut their yields at different times to reflect real investment returns.
Guardian has been a consistent top performer in the with-profits market, coming first in the 10-year period in four of the previous eight periods and taking first place for the second consecutive year in the 15-year category.
Copies of the Irish Times Personal Pension Survey 2000 are available from FDM at Summerhill House, The Curragh, Co Kildare. Tel: 045-442051. E-mail: fdm@fcs.iol.ie. The cost is £60 for a printed copy and £30 for an e-mail copy.
