Three consecutive years of dismal stock market performances has stripped the value of company pension funds in 11 countries back to levels last seen in 1997, a study revealed.

Investment consultants Watson Wyatt said $1,400bn (£870bn) was wiped off institutional pension fund assets in the major economic regions, including the UK, US, Germany and Japan, last year, reducing the value of the funds to $10,700bn (£6,660bn).

The group blamed the fall on volatile markets, adding that falling yields from bonds had also increased the gap between the schemes' income and the liabilities they had to meet.

Roger Urwin, global head of investment practice at Watson Wyatt, said: "This is the third consecutive year of losses and to make matters worse, liability growth has accelerated amid falling bond yields.

"Taking into consideration the increase in values to liabilities, global pension fund balance sheets worsened by a figure of over 20 per cent.

"Although it is anticipated that this trend is not likely to continue, most funds currently face some difficult decisions and will turn to either higher contributions, changed investment strategies or revised benefits or a combination to restore balance sheet strength."

Despite recent falls, the research found that pension fund assets had increased by about 74 per cent in the past ten years, the equivalent of an annual growth rate of six per cent. But the group said that following three consecutive years of falls, the value of funds are about $2,800bn (£1,740bn) lower than their 1999 peak of $13,500bn US dollars (£8,400bn).

Research by freight services group UPS showed that 38 per cent of UK company executives plan to retire early, while only ten per cent plan to work on past their retirement date.