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Policies that imposed penalties on early retirement or on transfer to another provider were dropped on grounds of inflexibility.

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Commenting on performance, Andrew Warwick-Thompson, head of the partnership pensions section of Bacon & Woodrow's private client department and author of the report, said: 'The use of past performance statistics in conjunction with a clear understanding of how past performance was achieved, an assessment of the current investment style of a management team and a knowledge of whether the individuals responsible for past performance are still in place, is probably the best guide to future performance.

'The objective of this stage of our analysis is to identify those funds which have achieved consistent good past performance with low volatility.' Out of an initial 193 funds listed in the performance statistics provided by FINSTAT, only 153 had five year track records.

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WITH more than 100 providers of personal pensions, each offering a plethora of funds, it can appear virtually impossible to judge which offers best value for money.

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