The fluctuations of the stock markets have some pension fund holders quaking in their boots. This uncertainty, combined with growing inflation and the euro's freefall, may leave older investors wondering if they can ever retire.
Mr John McGovern of Becketts employee benefits consultants says that recent erratic share movements should not be a concern to most pension-holders. In fact, anyone putting pensions contributions in at the moment is buying shares cheaply.
But he says: "If you are within five years of retirement you should be talking to your consultant to make sure volatility is not affecting you too adversely."
The euro's slide has a positive impact on many pension funds, says Mr McGovern. As most pensions are diversified across countries and currencies, the value of their assets increases relative to the value of the euro. For example, the value of investments held in dollars will increase as the euro declines against US currency.
Although tech stock volatility is making all the headlines, it is only an issue in the short term. Some of the Republic's 18 pension fund managers, such as Baillie Gifford and Montgomery Oppenheim have a heavier weighting in technology and this is reflected in their stellar performance, says Mr McGovern.
Becketts latest pension fund survey showed that during the 12 months to March 31st, returns averaged 20.1 per cent. This figure was significantly boosted by the top performers listed above, with 14 of the funds (78 per cent) underperforming the average. While the Baillie Gifford and Montgomery Oppenheim funds have achieved excellent returns, they represent just 0.6 per cent of the Irish market with a combined value of €34 million (£27 million) out of a total for the 18 funds of €5.3 billion, says Becketts.
A more meaningful benchmark for the other funds is the median return which was 17.1 per cent for the year. Half the funds outperformed the median.
These return figures compare to inflation for the same period of 4.6 per cent. Despite the dive in returns expected in the second quarter, the difference between the average return and inflation is still wide enough to avoid concern.
"I don't think we're going to return to days of very high inflation and I think the euro will solidify," Mr McGovern said.
Pensions are returning on average 8-12 per cent a year and the last 10 years have seen a fantastic period of growth in pension fund returns, he said.
Over the longer term, Montgomery Oppenheim retains the number one spot for the three- and five-year periods. For the seven- and 10-year period, Eagle Star was the best performer.
