Pension companies fail to deliver Laith Khalaf, a pensions expert at Hargreaves Lansdown, which compiled the report, said: "This shows how poorly managed many of the UK's biggest pension funds are." The problem, he said, is that many investors bought these funds years ago, and may not realise what low returns they are now getting. Annual statements give only the current value of the pension; they don't show what part of your return is due to additional contributions, or what is attributable to investment growth (or lack of it). They also invariably fail to put the return in any context, as there is no comparison with other funds or even a "benchmark" market average. These pension funds are often the "default" option on company pension plans, as well as being sold directly to consumers via banks and advisers. Mr Khalaf said: "These funds were designed to be 'safe and steady' options, whose remit was to deliver a return broadly in line with the market." To this end, the majority of these funds don't invest solely in equities, but are what are known as "balanced managed" funds. This means they have between 40pc and 85pc of their assets in shares, the rest being invested in bonds, property and cash. But while the "average" balanced managed fund produced a return of 94.3pc over the past decade, most of these pension funds have again underperformed. Friends Life's Flexible pension has grown by 76pc over the period, Clerical Medical has returned 79pc on its balanced pension, Lloyds has returned 85pc on its managed pension and Barclays 88pc on its equivalent fund. Mr Khalaf said: "These funds have been designed to be average, but many are not even meeting these fairly modest aims." And, of course, as these pensions are all actively managed, investors are paying higher fund management charges than those levied by "passive" tracker funds or ETFs (exchange-traded funds), which will simply mirror a given stock market index for a fraction of the cost. Philippa Gee, who runs her own advisory firm, said many people pointed out that passive tracker funds were "guaranteed to underperform" because they simply returned what the market did, minus charges. But these large active pension funds are also doing exactly that - only they are taking a higher fee, and, as this report shows, the potential for underperformance is significantly higher. Ms Gee added: "I see a lot of investors who have invested in these massive funds, but then the performance has just been sideways." Fund managers have no encouragement to outperform as this would involve taking a high risk, which may not fit comfortably with the investment style of the fund in question, and they have no push from investors to perform, as the money will stay there whatever the return delivered. This is because the banks, salesmen and advisers who sold these pensions in the first place are, on the whole, no longer reviewing them - although some will still be collecting an annual commission payment on the back of the sale. Damian Fahy of FundExpert.co.uk said: "The level of underperformance of bank funds highlights the importance of seeking independent investment advice. Buying investments based on where you bank can leave you languishing in funds that are perennial underperformers. Many of these managed funds - those that invest in a broad spread of assets - do not add value. Some are badged as 'cautiously managed' funds, but are often anything but. A spokesman for Aegon, which manages the Scottish Equitable funds, said: "We recognise the long-term performance of the [Aegon] Scottish Equitable Mixed fund and UK Equity fund isn't to the standards we set ourselves or reflective of what we have achieved elsewhere in the business." He said the company had made management changes to address these issues.