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Inflation greater than returns on pension funds Back  
Over the five years to the end of 2002, Irish managed pension funds returned just 2.4 per cent p.a. on average, whilst inflation over the same period was 3.9 per cent per annum according to statistics compiled by Watson Wyatt.

Pension funds fared no better in 2002 with the average Irish managed pension fund falling some 19.0 per cent. Bank of Ireland Asset Management (BIAM) was the best performer in 2002 with funds declining by 13.1 per cent, whilst KBC Asset Management (KBCAM) was the worst performing pension fund manager last year as its pension funds declined by 24.4 per cent.

Pension funds fell most in the second and third quarters with funds on average recording small positive returns in the first and fourth quarters. In the equity market ‘value’ stocks generally outperformed ‘growth’ stocks, which meant that investment managers with lower equity holdings and a ‘value’ bias toward stock selection did better than those with higher equity holdings and a ‘growth’ bias.

According to Watson Wyatt the biggest issues for investment managers were how they dealt with falling stock prices, the unwinding of the TMT bubble and the prospect of further declines in stock markets. This poor performance has caused many company and trustee pension boards to adjust their investment strategy while others still are reassessing the design of their schemes.

Pension fund

31 Dec Five
2002 years
Aberdeen -18.7 1.3
AIBIM -24.0 0.3
BIAM -13.1 4.4
Eagle Star -16.6 2.0
Friends First -19.3 1.5
Hibernian Life -18.5 2.6
Irish Life -19.2 2.0
KBCAM -24.4 0.8
Montgomery -16.9 6.4
New Ireland -13.7 5.6
Standard Life -19.3 0.5

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