Strong equity returns in the UK and Europe of about 5.6% in the three months to December 31 helped pension funds return 11% last year, according to the WM Company, the performance measurement firm.

WM said concerns about the Madrid bombing, steeply-rising commodity prices and US deficits initially shook investor confidence in equities, but as the year wore on these factors were countered by improved economic growth and better news on corporate profitability.