The fall in real pension values reported in our first Family Money personal pension survey back in 1992 continues this year. The sixth survey in the series shows that net annual percentage yields have fallen by as much as 8 per cent - to between 9 and 11 per cent per annum.

With-profit funds continue to produce higher annual returns over unit-linked ones. The difference in percentage yields between the best performing policies in the two categories is approximately 2.5 per cent, but, in keeping with the trend established six years ago, the gulf between the performances of the two types of products has narrowed significantly.

The Family Money survey is produced in conjunction with the independent financial planning company, Financial Development and Marketing.

Unlike other pension surveys, it is the only one to examine the actual percentage and cash values - after all charges are deducted - that would have been paid out to pension fund holders by the major participating pension providers on January 1st, 1997.

Those pension companies whose with-profit, unitised withprofit or unit-linked products have been on the market for at least 10 years have been invited to provide their most competitive product within these categories. The example given is a man, who turns 60 on January 1st, 1997 who has been making lump-sum contributions of £2,000 into his pension plan for 10, 15 or 20 years. The results are net of all charges and costs.

Only two major companies declined to participate, Eagle Star and Canada Life, the latter joined the survey last year when its 10year, unit-linked fund ranked a respectable third place in a field of six providers. The Eagle Star product which would qualify for inclusion in this survey is a deposit administration type fund called SuperCapp which maintains 70 per cent of its assets in gilts and so is likely to have produced low investment yields over the period. Anyone holding this pension should arrange an independent review of its performance, especially its annual net yield to date - and prepare themselves for what could be disappointing returns.

Maturity results from Ark Life, Equitable Life, Lifetime and NZI are not included as they have not been participating long enough in the pension market - for a minimum of 10 years. Next year Lifetime Assurance celebrates its 10th anniversary and will be invited to join the survey.

The best performing 10-year, with-profit return, maturing this year is from GRE Life with a net yield of 12.66 per cent and a cash maturity value (from contributions of £20,000) of £40,813. In fifth place is Standard Life with a net yield of 8.87 per cent and a cash value of £32,875.

The best 15-year, with-profit return is from Scottish Provident with a net yield of 14.15 per cent and a cash maturity value (from contributions of £30,000) of £101,317. At the bottom of the table is Norwich Union with a net yield of 11.67 per cent and a cash value of £81,104.

The best 20-year returns are also from Scottish Provident with a net yield of 15.27 per cent and a cash maturity value of £243,847, while Norwich Union's net yield is 13.67 per cent with a cash value of £199,153, a difference of £44,694.

While these returns are impressive, readers should not assume these values will continue over the next 10, 15 or 20 years. The author of the survey and managing director of Financial Development and Marketing, Mr Eddie Hobbs, says "over the past five years there has been a dramatic fall in payouts from 10-year, withprofit policies. This is due, in no small way to the significant changes in inflation and investment conditions which began to filter in in the second half of the 1980's and would have had a much more dramatic effect on 10year policies than longer term policies."

Ten-year, unit-linked values have fallen from as high as 12.55 per cent, which New Ireland recorded in 1994 (the first year that unit-linked funds joined the survey) to today's best return of 9.95 per cent from Standard Life. New Ireland's fund yield has dropped to 9.32 per cent. For space reasons this week we are unable to include the with-profit and unit-linked comparison tables, but will do so in next week's Family Money.

"Holders of with-profit policies should not expect the current yields of 15 and 20 year policies to continue," says Mr Hobbs, "and should instead expect a convergence of these yields with those of short-term policies, i.e. yields in the range of 9-11 per cent per annum." He also reiterates his earlier view that the with-profits payouts have been at artificially high levels over recent years and are unrepresentative of the return on their underlying assets.

Companies like Norwich Union and Standard Life have already bitten the bullet and adjusted their returns downwards, while Scottish Provident and GRE Life have not, he says.

Scottish Provident UK have had its rating downgraded by Standard & Poors from "Excellent" to "Good" and the British financial press, he notes have stated that "Scottish Provident pay more under with-profits policies than has been earned on underlying assets. Standard & Poors expects such augmentation of benefits to further erode the company's capital base over the next few years while payouts are being brought down to supportable levels."

On the unit-linked front (unitlinked returns reflect the true value of their underlying assets and are not "smoothed" the way with-profits ones are by the application of annual bonuses) the best performing 10-year returns are from Standard Life with a net annual yield of 9.95 per cent and a cash maturity value of £34,969. At the other end of the table is Irish Progressive with a net yield of 8.34 per cent and a cash value of £31,900.