The figures, based on Morningstar data, are “pretty shocking”, according to Laith Khalaf, head of investment analysis at AJ Bell.

The figures show that 72% of UK pension funds have underperformed a tracker by more than 10% over 10 years while 37% have underperformed by more than 20%.

The underperforming funds lagging the iShares UK Equity Index tracker are from big providers like Clerical Medical, Phoenix, Scottish Widows and Standard Life.

Mr Khalaf said: “It’s pretty shocking that nine out of ten pension funds investing in the UK haven’t beaten a simple tracker fund over the last ten years. The magnitude of some of the underperformance is equally concerning. Almost three quarters of these funds underperformed by 10% or more, and over a third underperformed by 20% or more.

“This doesn’t look like a market which is serving consumers well, and yet tens of billions of pounds are invested in pension funds posting disappointing performance.”

Below are examples of some large pension funds which have underperformed an index tracker fund by more than 20% over ten years. AJ Bell compared performance of the funds and the wider sample to the iShares UK Equity Index fund, a UK tracker fund which has an annual charge of 0.05%.

Pension fund performance figures include the cost of the pension wrapper, and so to make a fair comparison AJ Bell reduced the annual return provided by the iShares UK Equity fund by 0.25% per annum to approximate returns net of platform costs.

Source: Morningstar total return to 30 April 2024. *Reduced by 0.25% per annum to approximate platform costs.

Mr Khalaf said: “Many of these pension funds were set up decades ago when there wasn’t a great deal of appetite from pension providers for investing too differently from the market. At the same time tracker funds were not widely available in the UK.

“The result was a horde of closet tracker funds sold to pension savers which largely follow the index, but charge fees in line with active funds.”

He said advisers who recommended a personal pension plan in the early noughties were required by the financial regulator to provide an explanation of why the scheme they were recommending was at least as appropriate as a stakeholder. The rule was known as RU64 and led to many advisers recommending a stakeholder pension.

Mr Khalaf said: “Plenty of pension savers will still find themselves holding schemes from the stakeholder boom of the early noughties. This is a bit like using a Nokia 105 in the land of iPhone 15s.”