Millions of investors are trapped in sub-standard with-profits funds that have closed to new business. They face stiff penalties if they move their money elsewhere but if they stay put their returns are likely to be below average.

Policyholders in these "zombie" funds were promised a lifeline by firms such as Resolution and Pearl. They bought many closed schemes and raised expectations that they would boost returns. However, statistics show that they have so far failed because most are still lagging open funds and other closed funds.