Value of average Irish pension fund rises 4.6% in first quarter

GOOD returns on investments in Irish and international equity markets boosted the value of Irish pension funds in the first quarter of 1996, with the average fund estimated to have risen by 4.6 per cent.

Figures compiled by actuaries and benefit consultants, Mercer, showed the highest returns were achieved by Eagle Star, which added 5.8 per cent to the value of its funds over the three month period.

Equitable Life followed closely, pushing the value of its funds up by 5.3 per cent, while Friends Provident added 5 per cent to its managed funds, figures issued yesterday have shown.

A strong start to the year in the Irish equity market and a series of acquisition announcements from the Group, AIB and Fyffes, helped to lessen the impact of falling yields in the bond market on Irish pension funds in the first quarter of the year, according to the survey.

The Irish equity market is estimated to have returned 8.3 per cent and there were good returns also in the US and European markets. This managed to more than offset estimated losses of 1.4 per cent in the Irish bond market over the three month period.

In the year from March 1995 to March, 1996, the figures showed good growth, with the value of the Irish pension funds estimated to have risen by 22.8 per cent.

Over that period, Eagle Star again emerged as the top performer with above average returns of 28.8 per cent. Bank of Ireland Asset Management also managed to produce strong growth, increasing its funds by 25.2 per cent over the same while Standard Life's funds rose by 24.8 per cent.

The lowest returns over this period were achieved by Equitable Life at 20.4 per cent, according to the survey.

Over a five year period, which gives a more accurate indication of a pension fund's performance, Mercer estimated Irish funds grew on average by 11.1 per cent a year.

Over this period, Canada Life was the top performing fund, adding 12.4 per cent to its funds annually. Bank of Ireland Asset Management came in a close second, with annual growth of 12.2 per cent, while Standard Life increased its funds by 12 per cent.

The worst performance over five years came from Irish Life, achieving below average annual returns of 9.8 per cent. AIB Investment Managers recorded only slightly higher annual growth of 10 per cent.

In the last 10 years Mercer indicated that annual returns were considerably lower, showing average growth of 8.9 per cent.

International markets, in which up to 50 per cent of Irish pension funds were invested, brought in good gains for fund managers in the first quarter, with the US market alone estimated to have returned 7.1 per cent.

Despite tensions between China and Tiiwan, the survey reported that Pacific Rim markets were up 11.9 per cent over the first three months of the year, while European markets also remained strong, moving ahead by 7.5 per cent.

The Japanese market was buoyed by foreign buying, but returns were largely offset by the depreciating Yen over that period, according to Mercer.

It estimated that Irish pension funds yielded no more than 1.6 per cent on investments in the Japanese markets so far in 1996.