The average pension fund saw positive gains in the previous nine quarters but the decline of 3.8% means this is the first loss since Q3 2015.

According to the Moneyfacts UK personal pension trends treasury report, of the 36 ABI pension fund sectors surveyed, only two (UK Direct Property and Money Market) avoided a fall.

The heaviest losses during the quarter were suffered by Commodity/Energy (-10.4%), Global Property (-6.8%) and UK All Companies (-6.1%). Just 7% of all pension funds surveyed produced growth during the three-month period.

This is of particular concern as just last month, the workplace pension contribution rates increased from 1% to 3% for employees. The minimum contribution level will rise further to 8% in April 2019, with 5% coming from employees.

Richard Eagling, head of pensions at Moneyfacts, said: “A major concern is how employees will react to seeing their minimum pension contributions triple. With signs of greater volatility returning to the investment markets it will be interesting to see if this dampens enthusiasm for saving into a personal pension or workplace pension, particularly given the higher minimum contribution rates that employees are now facing.

“It could also encourage individuals to reconsider their retirement income decisions at the decumulation stage by favouring the secure income of an annuity over the greater flexibility and risks inherent in drawdown.”