Company pension schemes rise 4.1%

Large employer-sponsored pension schemes rose by an average of 4.1 per cent during the first half of 2003, according to results published yesterday by the Combined Performance Measurement Service (CPMS).

The returns for the first six months of 2003 mark a change in fortunes for segregated pension schemes. Over the year to the end of June 2003, the average return for CPMS managers was a loss of almost 7 per cent.

Mercer, the investment consulting firm that runs the CPMS, said stock selection was the key factor behind the turnaround.

Mr Tom Geraghty of Mercer said the positive year-to-date return posted by each manager gave investors welcome relief.

"These figures, however, reflect a six-month period of high volatility, as equity markets continued to fall throughout the months leading up to the war in Iraq, followed by a pretty sharp recovery [equity markets rose by 11.6 per cent\] over the three months of quarter two," he said.

Mr Geraghty added that bond markets also continued to perform solidly.

"Therefore, the asset allocation between equities and bonds was not the chief differentiator between managers' returns."

The resurgent performance of some TMT (telecoms, media and technology) and economically sensitive stocks in the second quarter boosted the returns of managers that had kept a strong holding in those sectors in anticipation of a bounce, he said.

The CPMS survey analyses around 200 segregated pension funds with an asset base of more than €19 billion.

It differs from the quarterly surveys published by Mercer and other consultants.

These compare the performance of the unitised managed pension funds used by smaller employer-sponsored schemes.

Irish Life Investment Managers topped the CPMS table for the first six months of 2003, with a return of 5.5 per cent. The worst performing manager was KBC Asset Management.

Despite recent strong gains, medium-term returns remain in negative territory.

The average segregated Irish pension fund fell by 0.4 per cent per annum over the five years to the end of June 2003, compared to inflation of 4 per cent per annum in the same period.

Over five years, Bank of Ireland Asset Management was the top-performing manager, with a return of 2.7 per cent per annum.