Pension funds rose in October

IRISH PENSION funds recorded their sharpest gains in more than 18 months in October as volatile markets finally swung their way.

The average Irish groupmanaged fund recorded a gain of almost 5 per cent during the month, recovering some of the ground lost in turbulent market conditions in August and September.

It was the first positive return for the industry since May.

All providers recorded notable gains, topped by Kleinwort Benson Investors, which recorded gains of 6 per cent over the month. At the other end of the scale, Aviva Investors rose by 3.5 per cent.

Despite the strong performance in October, all the fund managers remain in negative territory for the year to date, with Canada Life/Setanta’s loss of 2.6 per cent putting it ahead of its peers. The average loss so far in 2011 is 5.8 per cent even after the October recovery and a number of providers are nursing losses in excess of 7 per cent, including Merrion Investment Managers at 7.4 per cent.

The tumultuous picture for pensions in 2011 is highlighted by the much lower losses over the last 12 months, with the average slippage here amounting to 1.4 per cent and two providers – Canada Life/Setanta and Zurich Life – actually reporting fractional gains for the period.

The general picture is no better over the five-year period, with the average industry loss coming to 3.5 per cent per year, eating into accumulated pension funds.

While the medium-term picture – the past decade – shows no fund managers in negative territory, the average gain for the period is just 1.6 per cent per annum, well below the rate of inflation over the same term. Only Canada Life/Setanta, Zurich Life and Standard Life managed to better the rise in the cost of living over the 10-year term, with Kleinwort Benson reporting no gains at all.