Investment of funds expected to begin in second quarter.Minors awarded compensation are likely to see better returns, writes Laura Slattery.

The tendering process for the management of court funds is now entering the final stages, a spokesman for the Courts Service has confirmed. Once a fund manager is selected, minors who are awarded compensation in court actions are likely to benefit from improved returns on their sum of money.

The tender to manage approximately €800 million in court funds, announced last April, was "down to the final few", the spokesman said.

The Courts Service Investment Committee will make a recommendation to the board in February. The investment of funds is expected to begin in the second quarter of this year, following contract negotiations with the selected fund manager.

Up to now, money awarded to minors by the courts as compensation and money held on behalf of wards of court has simply been lodged in a bank account rather than invested in a strategic manner.

Tendering guidelines given to fund managers indicate that there should be four separate investment strategies, each representing a varying degree of risk and return. A single fund management company will manage all four funds.

Money awarded to minors and kept in court funds until they are 18 will be invested in the lowest risk investment strategy, according to Mr Seán Quigley, director of finance and accountant of the superior courts.

"In the case of a minor age 12 or 13 awarded a relatively small amount of damages, say €20,000, to be held for about five years - an amount of money like that wouldn't go into a high-risk investment, it would go into cash and bonds," Mr Quigley said.

The investment would be low risk and low return, he added, but would still improve on the returns achieved on deposit under the current system.

In most cases, unless the child is mentally incapacitated and later becomes a ward of court, the fund managers will know that the money is due to be paid out on the child's 18th birthday and will opt for investments guaranteeing a positive return.

Parents can make applications to the county registrar on behalf of their child for payments out of the account or investment fund from time to time, for example to put in special needs equipment such as a ramp or stairlift, to pay for education expenses or to fund holidays such as school trips.

The highest risk investment strategy will place money in a mix of equities, bonds and property and will apply to money held by the court on behalf of adults who are judged to be incapable of looking after their own money. These adults are deemed wards of court and in some cases would require medical care over a 20 or 30-year period.

If the investment strategy had been adopted three years ago before the period of severe market turbulence began, some funds would be showing losses, said Mr Quigley.

But he added that money would be invested only in equities where it was likely to be held by the court for a long period of time, over which equities had always historically outperformed other types of asset.

The move from deposits to a range of investments is part of an overall modernisation of the management of court funds. The €800 million fund currently comprises 22,000 separate accounts and transactions from each of these accounts have traditionally been conducted manually at each local Circuit and District Court and in the High Court and the Office of the Wards of Court.

Piloting of a new computerised accounting system which will bring together account records under a central database is currently "well under way", according to the Courts Service spokesman.

Under the new system, beneficiaries will receive annual account statements.