The importance of good fund performance - and choosing the correct mix of investment assets - cannot be over-emphasised, says Mr Eddie Hobbs, the author of the 1997 Family Money Personal Pension Survey.

"Einstein was once asked what the most important mathematical formula was and he replied `Compound interest'. It's easy to see why. An extra 3 per cent per annum over a 30-year period would double a pension fund. There is already a greater than 3 per cent per annum difference between the best and worst 15-year fund performances."

As table 3 shows, a 9 per cent return over 10 years will result in a payout of about £33,000 on total contributions of £20,000. This is slightly less than the 1997 return from the Irish Life unit-link policy. But increase the yield by 3 per cent to 12 per cent - approximately that achieved by the Scottish Provident's 10-year, with profit policy - and the payout rises to approximately £39,000 or a difference of £6,000.

Over 20 years the same 3 per cent gap in performance amounts to the difference between a pension fund worth £111,500 and one worth £50,000 more or £161,400. At the moment the differences in yields on 20-year, with-profit funds is less than 2 per cent, or a cash difference of about £43,000.

Carefully choosing the type of pension; the company you purchase it from; the underlying investments and whether you should pay on a commission or fee basis; will all have a significant effect on fund performance.

The report recommends that instead of allowing all contributions to fall into the ubiquitous managed fund, the catch-all depository for the vast amount of pension money in this country, people should consider a more pro-active approach to their investment.

Depending on age and risk profile, pension fund contributors should consider concentrating their cash in an equity dominated portfolio of funds.

The survey includes a chapter on the overall performance of the different asset classes and what percentage of equities, gilts, property and cash are represented within the participating pension companies. This information should be of particular importance to financial advisers.