UK pension funds suffered a 6.2 per cent loss over 2018, the largest loss experienced by funds since the 2008 financial crisis, data has revealed.

The latest Moneyfacts UK Personal Pension Trends Report published today, 30 January, found that the average pension fund suffered a fall of 7.3 per cent over Q4 2018, makings a decrease in fund performance over the final three quarters of the year.

The results are in stark contrast to the previous two years, as pension funds recorded 10.5 per cent and 15.7 per cent returns over 2017 and 2016, respectively.

Moneyfacts head of pensions, Richard Eagling, commented: "The extent of the losses experienced by pension funds last year, combined with the return of greater volatility, raises the question as to whether pensions savers and drawdown investors will be sufficiently alarmed to adjust their investment strategies and reduce their exposure to stock markets.

“The other threat posed by falling pension fund returns is that it could undermine efforts to encourage greater personal pension contributions."

According to Moneyfacts, the investment landscape has been effected by the widespread political and economic uncertainty.

“Last year's market downturn will increase the focus on the investment decisions being made by pension savers and drawdown investors," Eagling added.

Last week, the overall funding level of pension schemes could be hit by around 5 per cent in the event of a no-deal Brexit, XPS Investment has warned.

Issuing its Brexit update – a pension investment perspective today, XPS chief investment officer Simeon Willis warned that no deal could reduce the funding level of schemes by 5.3 per cent, while a “good deal” could see overall funding grow by 5 per cent.

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