# Underperforming New Ireland pension



## imogen (20 Nov 2006)

In early 2000 at the height of the Equitable Life saga I moved about 20k of equitable life personal pension savings into New Ireland. I won't mention who advised me to do this, but at the time I was very grateful to have escaped from Equitable Life given what has happened to many who stayed in, including my own father. The problem is that I appear to have moved it to the wrong place - out of the frying pan into the fire.

The New Ireland fund promptly dropped to 2/3 of its value within a year. Even now after six years the value of the fund has not quite reached what I paid in during 2000. This is very annoying to say the least since it's my oldest and largest pension amount and is seriously underperforming.

Is there anything you can do with an underperforming fund or are the charges so high to move the pension that it's pointless? How do you find out? My pension is in something called the Pension Equity Fund (6)SP. I have seen several comments on this board that New Ireland used to be OK but due to it being managed by a group (is it Bank of Ireland Asset Managment or something?) where all the good people have now left, this is why it's pretty poor now.

Grateful for any advice as I find it very annoying and depressing to have worked so hard for that money and for it to have turned out to have been such a bad investment.

All the best

Imogen


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## Brendan Burgess (20 Nov 2006)

Specifically what fund did you invest in? I am surprised to hear that any fund lost 2/3rds of its value unless you put your pension into a hitech or biotech fund. With New Ireland you have a choice of many sub-funds to invest in. 

brendan


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## Guest126 (21 Nov 2006)

I think that the fund lost 1/3rd of its value, not 2/3rds.

I guess it could be an All Equity Fund, with a hell of a lot of broker commission thrown in for good measure.


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## TimothyC (21 Nov 2006)

Does BOI Asset Management (aka BIAM) actually manage the New Ireland funds? I thought that New Ireland fell under BOI Life which has separate fund managers. Obviously, if it is BIAM, then New Ireland has some issues to deal with.


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## Guest126 (22 Nov 2006)

BOI Life funds are managed by BIAM.

So are New Ireland funds...since they were taken over by BOI.


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## TimothyC (22 Nov 2006)

So should we stay away from New Ireland then even if their charges are competitive?


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## imogen (22 Nov 2006)

How do I find out what fund I am in? I have already put in the first post all that it says on the document they send out to tell you the current value. I wasn't able to get any sense out of them when I tried phoning a year or two ago apart from a standard piece of paper stating the value.

Thanks for the replies.

Imogen


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## Guest126 (23 Nov 2006)

A lot of investors think BIAM are great, others don't.

Just call them, give your policy number and ask for name of fund that your money is invested in.


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## F. Kruger (23 Nov 2006)

imogen said:


> How do I find out what fund I am in?


 
Your original post says that you are in 'Pension Equity Fund(6)SP'

Who ever advised you to invest should have details on the type of fund that this is.


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## Guest126 (23 Nov 2006)

It's an equity fund for single premium pension contributions (I'm not the broker!!).


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## Claire1981 (23 Nov 2006)

Imogen,

Do you hold this policy through a broker or did you take it out directly with New Ireland? How many years do you have left to retirement?

I can imagine after 6 years how frustrating it must be to not have recovered to your original poisition however equity markets are doing well at the moment and your fund should be recovering. That particular fund has done quite well for the past few years (if you check the New Ireland website for performance figures).

You can either sit tight, hope that equity markets continue to perform well and your fund will in time come along and hopefully move out of the red, or, you should get onto your broker/New Ireland and ask them for a list of funds that you can switch into and some information on these funds. Perhaps a fund switch might give you better peace of mind. New Ireland do charge for fund switches but it may be worth the €25.

As you're invested in an equity fund I can assume that you have a relatively high attitude to risk and were aware that the fund was not guaranteed (the stock markets took a large dip 01/02) but if you still have a long term to retirement there is still time to recover.


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## Daddy (23 Nov 2006)

Pension returns are'nt for real well not if you are in a managed fund.

Maybe aggressive funds might be higher.

Any figures the companies throw out are based on 6% return which used be 8% up until 9/11.

For instance I challenge anyone with a BIAM or Canada Life managed pension to prove to me that they have achieved a 6% return over the last 10 years.

More like 3% after costs I would say.

The future returns ain't looking so bright either (see below).

Tax relief is great but returns into the future don't look at all promising.

According to Warren Buffett the following applies:

Dec 1989 to Dec 1999 (100 years) Dow increased from 66 to 11,497.

Guess the rate of growth that gave this return ?

Have you guessed ?

5.3% compounded annually.  Dividends are excluded.

The really worrying thing about future returns is:

To achieve an equal rate of gain in the 21st century the Dow will have to rise by Dec 2099 to - brace yourselves -
2,011,011.

Six years into this century the Dow has gained not at all.

More on this from Warren can be found pages 18/19 of Berkshire Hathaway's recent accounts.


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## Guest126 (23 Nov 2006)

The Dow (presume you mean DJIA) has this month regularly breached its all-time high, so can't agree with your post.

Also, the Dow was in around the 2000 mark in 1989 - it was about 240 in 1928.


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## Daddy (23 Nov 2006)

Point is - the Dow at 31/12/99 was 11,497 and today approx 12,350

Six years into this century gives a 7.4% increase after 6 years.

Would you be happy if you had bought the Dow index back in Jan 2000
with this return !

If you disagree with my post then your disagreeing with Warren Buffett, not me.

I'm not disputing the fact that you say the Dow was at 2000 in 1989 or at 240 in 1928.

The point is after 100 years to Dec 1999 the Dow compinded on an average annual compound rate of 5.3% (excluding dividends) to reach 11,497.   Hence pension returns in the last century will be a damn sight better than going forward.  The Dow has only grown by 7.4% since the turn of the century.

Ally this to pension returns since the start of the century and your getting about the same return.

I fear very much for the pension returns of the future.

Lokk at BOI and others trying to get out of defined benefit pensions because of the shortfalls in the funds which employers do not want to cough up on and are going about making sure that future employees paddle their own canoe.

It all ties in that future returns are going to be a lot less than the touted standard projections given of 6% P.A


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## Guest126 (23 Nov 2006)

Some of Warren Buffett's investments include components of the DJIA.

The retun of the DJIA since Nov 2004 to Nov 2006 is 8.4% compound.

Can we therefore conclude the next 100 years will produce great returns?
NO.

Can you make the conclusion of bad returns for the next century?
NO.


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## Daddy (23 Nov 2006)

Your picking much too short a time frame.

Everyone knows the market has gone up in spurts in the last 5 years.

I think Warren's reasoning is spot on and I'm confident that no 6% annual returns will be made in pension investments in the coming years.

Simple question is do you foresee the Dow Jones being at 2,000,000 in 100 years time thus giving a 5.3% gain compounded annually because that's what it's got to get to to give the same return as the last century.

I think my posts are a real eye opener for people who have pensions and I include myself in that group.

What it all boils down to is that I really wonder is it worth putting money into a pension ?


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## DirtyH2O (23 Nov 2006)

Is using the Dow Jones as the benchmark for future returns really such a good idea? 
It's only one market albeit an extremely dominant one in the last fifty plus years and it will still be important in the future in partly due to the huge amounts of wealth generated in the past 100 years but possibly less so and asset allocation should reflect this.
Companies tend to get added to the Dow at or near their peak price which can skew things as well.
Dow is a good benchmark for companies that wish to shed their DB schemes without an adequate  alternative for their staff in place by pleading the poor mouth.


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## Guest126 (23 Nov 2006)

I am sure back in 1928 (when it was 240) people did not think it would reach 12,000...but it did.


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## Daddy (23 Nov 2006)

I think everyone should read pages 18/19 of Berkshire Hathawys recent annual report for further insight as to why returns are going to be so poor in the years ahead.  Sorry, not able to post a link.


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## Daddy (23 Nov 2006)

Capital CCC

Check back with you in 20 years p.g to see how things are progressing.


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## Guest126 (23 Nov 2006)

Daddy - I am looking forward to it already.


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## Daddy (23 Nov 2006)

Thanks for posting the link.

The pages I referred to commence with 'How to Minimize Investment Returns'

I'd say a well located property probably overseas is the best bet as an alternative.   

I do seriously think pensions are not going to return over the coming years.

Anyone check their pension recently ?  Happy with your returns over the last 5-10 years ?  Please post if your fund is doing well.


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## Claire1981 (24 Nov 2006)

Daddy,

Can I ask why you specifically say that *pensions* wont produce the returns over the next number of years? Pension contributions are usually invested in the same funds as savings, investments etc. 

Have to say I'm very pleased with the performance of mine so far (only 2 years in), invested in Eagle Star Matrix funds.


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## Daddy (24 Nov 2006)

Claire:

2 years too short a time frame and your after starting off with a big swing up in the markets.

I specifically think managed pensions will not perform because of Warren's reasoning.   Did you read the article which was posted above ?
Would you be optimistic or pessimistic having read it!


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## Claire1981 (24 Nov 2006)

Daddy:

Agreed, 2 years is too short a time frame.

I have read and can appreciate the article but it wouldn't sway me into the doldrums of despair quite yet.


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## Guest126 (24 Nov 2006)

Daddy

A pension fund can invest in property, overseas property and pretty much any asset that you care to mention.

To say that pensions will perform poorly and property will do well makes no sense.


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## DirtyH2O (24 Nov 2006)

Daddy said:


> Thanks for posting the link.
> 
> The pages I referred to commence with 'How to Minimize Investment Returns'
> 
> ...


 
I started a company pension in 2000 and it's over 50% above contributions so that's about 13%-15% annualised. With New Ireland to boot! Personally I'd prefer if it was lower as the units would be cheaper. The only price that really matters is when you move it to non equity as you near retirement so I think it's pointless until then, as is your house price until you try to sell it!


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## imogen (2 Dec 2006)

Hi all

Sorry for the silence, I was over in London for a week looking after me Da who was just out of the hospital. 

I am 45 so I have between 15 and 20 years to retirement (please God...) but I certainly would not expect my income to necessarily go up any more, and my understanding is that I should be looking at medium risk funds at my age. 

What I'm confused by is just how poor the New Ireland performance appears to be compared to the single lump sum pension funds I have with Aviva (they were originally 3 different pension providers, Norwich Union, Hibernian and CGU), Scottish Provident, Eagle Star and Standard Life. 

Obviously because the New Ireland one is the largest and oldest (was an Equitable Life one that I used to make regular but variable payments too) it sticks out particularly badly but their performance really seems to be lousy compared to the others, several of which also predate 2000. That was why I was wondering if I should switch. I actually meant switch companies again - I did not know you could switch funds or whether that would be a good thing to do.

I will get in touch with New Ireland and try to find out some more about the actual funds and the other options available and post that here.

Thanks everyone for your advice. 

Imogen


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