THE VALUE of Irish group-managed pension funds fell in October, suffering their first setback in eight months.

The average fund fell by 2.5 per cent as stock markets were rattled by renewed concern about the global economy.

All the main Irish funds recorded negative growth in October – ranging between -1.1 per cent at Canada Life/Setanta and -3.4 per cent at AIB Investment Managers (AIBIM).

“There is a still a great deal of uncertainty surrounding the long-term sustainability of the recovery,” said Betty O’Reilly at Hewitt. “Despite companies delivering better than expected third-quarter earnings, most stocks appeared to have priced in the good news . . . improvement in earnings is due to cost-cutting rather than growth in sales.”

Despite the setback, Irish pension funds have recorded average growth of 15 per cent over the first 10 months of 2009 and 6.2 per cent for the past year. Performance in 2009 has varied more than usual with Merrion Investment Managers reporting 22 per cent growth in the period, almost three times the 7.8 per cent at AIBIM.

Over the longer, more relevant 10-year term, Irish pension funds have returned a disappointing 1 per cent per year, on average, well below the average inflation rate for the period of 3 per cent. “Only Merrion Investment Managers outperformed inflation over this period, with a return of 3.4 per cent per annum,” said Fiona Daly, of Rubicon Investment Consultants. Indeed, AIBIM and KBC Asset Managers continue to report losses over this term.