Investors need to lower their pension fund expectations, according to Jupiter’s Charlie Crole, who believes more of an emphasis should be placed on capital preservation rather than high growth.

Recent FE Trustnet research showed high levels of dissatisfaction among pension holders with the returns from their policies. However Crole, head of institutional client services and business development at Jupiter, thinks they need to be more realistic given the dire economic backdrop.

"Investors need to realise that the real risk is the risk of losing money," he said.

"High volatility and poor returns are creating problems for pension investors and we think this is likely to continue, while record high bond prices are creating a need for more safe havens."

Speaking at the launch of Jupiter Multi-Asset Strategic Reserve – an Absolute Return portfolio that is aimed at pension institutions – Crole said there is a need in the pension industry for cautiously managed, low-risk funds.

Miles Geldard, co-manager of the new portfolio, added: "The choice of low-risk investments is pretty limited."

He says the fund will follow a "cowardly" approach, with a high emphasis on flexibility, shorter-term investments and greater liquidity.

"Past examples of crises show that if you make a few correct big calls, for example getting out of equities just before a major bear market, it is very powerful."

"Fund managers often play safe by trying to hit their benchmark. However, we have no benchmark so if something is overvalued we will have nothing of it."

"The problem of having a macro position is you are by nature pessimistic, therefore the challenge is not to be too cautious."

Geldard built and managed the JPM Capital Preservation fund when working for JP Morgan and also ran JPM Cautious Total Return.

The Jupiter Multi-Asset Strategic Reserve fund will have a wide remit to invest in bonds, stocks, currencies and convertibles with no minimum requirements for any holdings.

It will aim to return cash plus 3 per cent, and the managers are asking investors to judge it over a three-year timescale.

Edward Bonham Carter, Jupiter chief executive, agrees that pension investors need to downgrade their expectations.

"The issue of adequate retirement provision is one of the most significant challenges we currently face as a nation," he said.

"Changing demographics in the UK mean that most people will have to work harder for longer. It also means that the way people invest is likely to change, with investors, consultants and other intermediaries increasingly looking for strategies that can provide capital growth with lower volatility."

According to a recent note by the Pensions Policy Institute, 45 per cent of today’s over-50s are likely to have to work 11 years past the state retirement age to fund the standard of life they expect.