A STRONG second quarter has seen Irish managed pension funds grow by 5.5 per cent in the first half of the year. Growth of 11.3 per cent between April and June more than compensated for a weak start to the year, with funds shedding 7.5 per cent of their value in January and February.

However, June proved a mixed month for Irish fund managers, according to figures released yesterday. While the majority of funds recorded growth, led by Standard Life Investments with a gain of 0.7 per cent, losses elsewhere – notably Irish Life Investment Managers’ 0.6 per cent setback – reduced the average return for the month to 0.1 per cent.

Despite the recovery, pension funds remain in the red for the past year as a whole, with an annual average loss of 19.3 per cent. The strongest performer, Canada Life/Setanta, was 13.9 per cent weaker over the past 12 months, with AIB Investment Managers losing 23.9 per cent over the same period at the other extreme.

Over the longer, more relevant period for pension fund investment, no fund has succeeded in bettering the average annual inflation rate of 3.2 per cent over the past decade.

Just six fund managers, led by Merrion Investment Managers at 2.9 per cent per annum, have recorded any gains over the period, with the other four managers surveyed by Rubicon Investment Consulting nursing losses of as high as 2 per cent per annum in the case of KBC Asset Management.

Labour Party spokeswoman on social and family affairs Róisín Shortall produced figures yesterday showing that in 2006 the highest earners – those with annual income in excess of €250,000 – accounted for one-third of the €425 million spent in tax relief on pensions.

The figures, obtained through a parliamentary question, indicate that, on average, people earning more than €250,000 shaved €22,000 off their annual income tax bill. A person on a wage of between €35,000 and €40,000 received a benefit of €763, with those earning between €75,000 and €100,000 seeing a tax saving of €3,029.

Meanwhile, Minister for Social and Family Affairs Mary Hanafin yesterday announced the reappointment of Paul Kenny as pensions ombudsman.

Mr Kenny has served as ombudsman on pensions since the office was established in 2003.