Group pension funds have now seen one-fifth of their value wiped this year in volatile markets. In the nine months to September 30th, the average fund performance was down 21.5 per cent, according to figures released by insurance and pensions consultants Coyle Hamilton.

The average fund performance was down 12.4 per cent in the quarter just ended, according to the investment manager survey.

Only two of the 15 funds included in the survey achieved a positive rate of return over three years - Montgomery Oppenheim and Bank of Ireland Asset Management.

The scale of the turmoil in stock markets this year was shown in the performance of Bank of Ireland, which was the top performer in the year to date and over the full 12-month period. However, it still lost 14.8 per cent since January, compared with a 12-month loss of just 6.4 per cent.

KBC Asset Management has lost more than a quarter of its value in the first nine months of 2002.

"Unless something very dramatic happens in the next year, we're going to be in negative territory for some time, I'm afraid," said Mr Stephen Lalor, pensions consultant with Coyle Hamilton.

Montgomery Oppenheim was the best-performing fund over three and five years, with returns of 2.1 and 6.5 per cent per annum respectively.

Standard Life propped up the table over five years with growth of just 0.6 per cent.

Over the longer 10-year period, the best returns were recorded by Eagle Star, with annual growth of 13.4 per cent, well ahead of bottom-placed Irish Life, which saw annual returns of 10.4 per cent.

Returns listed in the survey are net of fund management fees but ignore any additional upfront charges and intermediaries' commission.

The poor performance of pension funds has prompted concerns that contribution levels to pensions will need to rise in order to provide an adequate level of retirement income. Unstable markets and the FRS 17 accounting standard, which demands a stricter assessment of companies' future liability, have also put a spotlight on pension fund returns.

"Clearly these performance figures will have a major impact on pension schemes from a funding and FRS 17 perspective and, in all likelihood, will necessitate significant increases in future funding payments," according to Coyle Hamilton.