Pension funds increased on average by 19.7 per cent over 1999, according to the latest figures published by Mercer Benefit and Remuneration Consultants.

Most of the increase came in the final three months of the year when the average fund increased by 14.5 per cent.

Over the year, Baillie Gifford was the top performing manager with a return of 34.9 per cent, and Montgomery Oppenheim was in second place on 34.2 per cent. These are a full 15 percentage points ahead of the average for the year. Guardian Life came bottom of the table with a return of 13.9 per cent, followed by Progressive Life and Equitable Life at below 15 per cent.

Over five years, Eagle Star has maintained its top position despite a poor first half to the year, with an average annualised return of 23 per cent. Friends First was in second place with 22.5 per cent a year. Canada Life is in the lowest position with a return of 17.4 per cent a year, behind the 20.5 per cent a year average. The one-year return for the pension funds was less than the returns on global equity markets, with the global index up 47.6 per cent. The pension funds benefited from the surge in global markets as they shrugged off interest rate and inflationary worries, and many markets including the US and European finished the year at all-time highs.

"The surge in markets has resulted in double digit pension fund returns being recorded for the fifth year running", Mr Tom Murphy, actuary and investment consultant with Mercer said.

The best performing markets were Japan and the Pacific Basin region. The Japanese index more than doubled in 1999 achieving a return of 101 per cent, while the Pacific Basin was up over 60 per cent.

However, this was in stark contrast to the performance of the Irish equity market which still accounts for 25 per cent of Irish pension fund assets. Irish equities only returned 2.2 per cent over 1999.