During 2007, the average pension fund posted growth of just 5.41 per cent, compared with an average growth of 9.17 per cent in 2006. The latest figures are down significantly on the 19.9 per cent growth witnessed in 2005.

Indeed, the average pension fund return was at its lowest since 2002, when the ongoing bear market led to average losses of 15.2 per cent.

Richard Eagling, editor of Investment Life & Pensions Moneyfacts, says, ‘After enjoying four successive years of strong investment returns, most pension holders will have seen only modest gains to their policies during 2007. Only those pension savers who hold more aggressive funds investing in the Far East and Global emerging markets will look back at the past 12 months with any real sense of achievement.’

While the UK has been among those hardest hit by the credit crunch, Asia has emerged relatively unscathed, with China in particular enjoying a phenomenal 2007. The Far East excluding Japan sector proved to be the biggest success story of the past 12 months, with the average pension fund posting a return of 36 per cent.

But pension savers who opted for a property fund will have endured an average fall of 13.6 per cent, while Japanese funds plunged by an average 11.4 per cent over the course of the year.

For a number of investors, it would have been financially more rewarding to have remained in cash, with the average savings notice account offering a gross return of 3.76 per cent for the year (based on £1,000), according to Moneyfacts.