• Not only is the divergence on pension investment returns for the same asset class surprisingly large, our analysis has identified that underperformance  is in many cases persistent and long lasting. This can have a very large impact on your retirement income.
  • Consider the following example; Let’s assume you have a current fund of €500,000, are making €2k per month pension contributions ( between employee and employer) and intend to retire in 15 years’ time
  • We have used data from Money mate to extract ten year pension after cost investment performance, across the providers for their ‘Balanced Managed Fund’   which is widely used in Irish Group and Individual Pensions
  • We compare how the example above would work for one of the better performers – company A, the market average of all the performers and one of the inferior performers i.e. Company B
    • What size is your pension if the last 10 year Managed Balanced Fund returns are repeated
    • Company A. +6.1% annualised return – pension grows to €1.78mio
    • Market Average.  +3.02% annualised return – pension grows to €1.23mio
    • Company B.  -0.21% annualised return – pension grows to €839k
      • As there is very little mobility between pension fund managers in Dublin, there does not appear to be any realistic mechanism for ‘mean reversion’  so underperformance can and does persist
      • Bottom line is you need to make sure your investment manager is not consistently in the bottom quartile. The effect on your retirement pot could be huge. If you find that your current provider is bottom quartile we suggest you take prompt remedial action