Pension funds in Ireland lost almost €10 billion last year despite a return to growth in the last quarter. Figures from Mercer and Watson Wyatt published yesterday show the average Irish group managed pension fund lost 18.9 per cent of its value in 2002.
The figures come just weeks before the first of the Government's new low-cost Personal Retirement Savings Accounts (PRSAs) are approved and industry sources admit they are likely to make it more difficult to sell such accounts.
The losses in 2002 mean that, allowing for inflation of 3.9 per cent per annum over the last five years, most Irish funds have recorded no growth for more than five years.
The Pensions Board, which regulates the industry, is examining the prospect of introducing a degree of flexibility for funds in meeting the funding standards required - that the fund should meet its liabilities if it is wound up. "We would be concerned that otherwise good funds would be in trouble as a result of the stock market performance of the last couple of years," said chief executive Ms Anne Maher. "After all, pensions are a long-term investment but we are also in the business of protecting members' interest."
According to the Irish Association of Pension Funds asset allocation survey, there was €50.6 billion in Irish pension funds at the end of 2001.
A spokeswoman said it was likely the performance of group managed funds would be replicated throughout the industry. That would imply a fall of €9.56 billion in the value of funds during the year.
The poor result is not likely to affect those drawing down pensions imminently as most of their assets will have been switched to cash in recent years.
The people most vulnerable are personal pension holders planning to retire in about five years who want to exit the stock market around now, and those retiring unexpectedly.
According to yesterday's data, funds showed a gain of 1.8 per cent in the three months to December. Strong gains in October and November, which saw the average fund grow by 8 per cent, were undermined by a market slump in December.
The best performing fund in the most recent quarter was KBC Asset Management at 3.4 per cent following by Standard Life at 3.3 per cent.
Bottom of the list came Baillie Gifford, which still managed to record a positive performance with a return of 0.5 per cent.
Ironically, KBC was one of the poorest performers in December and has struggled over the longer term. Over one year, Bank of Ireland Asset Managers did best, losing just 13.1 per cent of its fund value, compared with a loss of 24.4 per cent by KBC Asset Managers.
"The better performing managers over the year benefited from holding an underweight position in equities, while also positioning themselves at a stock level towards more defensive areas of the market," said Mr Tom Murphy, head of Mercer Investment Consulting.
Over the longer 10-year term, Bank of Ireland-owned New Ireland and Eagle Star are the best performers, returning growth per annum of 12.5 per cent, just ahead of Bank of Ireland at 11.7 per cent. AIBIM props up the table with growth of 9.6 per cent per annum over the period.
