IRELAND - The aggregate deficit of Irish pension funds has doubled to e5bn at the end of 2004 from around e2.5bn at the end of 2003, according to Mercer Investment Consulting.
Mercer said that some 60% of Irish pension funds are technically insolvent.
The consultant’s observations come in the wake of a 10.4% rise in the value of the average managed fund in 2004.
Tom Murphy (pictured), head of Mercer Investment Consulting said: “On first glance, it would appear that pension funds have experienced better times in 2004.
“However, pension liabilities have grown by an even greater amount during the twelve months and this has resulted in a continued fall in solvency funding levels for most pension schemes. While some industry participants may be popping champagne corks at the recent results, there is no doubt that the overall situation has worsened and there is in fact no call for celebration
Murphy said that most people did not realise that pension liabilities are valued with reference to the growth in bond markets and t he the growth in long dated bonds during 2004 was 15%, out-stripping asset returns by almost 5%, leading to a corresponding fall in funding levels.
AIBIM's Multimanager Fund (12.8%) topped the table over the full year 2004, followed by Irish Life's Managed Fund (12.4%), against the average Managed Fund return of 10.4%. KBCAM (7.1%) and Acorn Life (9.5%) lagged their competitors over this period.
The average Irish Pension Managed Fund gained 4.8% over the fourth quarter of 2004, bringing the full year return to 10.4%.
Eagle Star's Balanced Fund led the way over the quarter up 5.6%, closely followed by AIBIM's Managed Fund returning 5.4%, relative to the average Managed Fund return of 4.8%. The underperformer over this period was Davy's Exempt Pension Managed Fund returning 3.5%.
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