One of the great mysteries of the past couple of years has been the extraordinary silence of pension funds. They are perhaps the biggest victims of the financial crisis, with billions wiped from the value of their investments. Few have more reason to complain about the reckless greed of bankers, yet there has been barely a peep from the sector. The National Association of Pension Funds (NAPF), the body with the authority, credibility and firepower to make its voice heard, has stayed schtum. Even today it refuses to criticise the banks who led the world over the precipice.

This is the organisation that purports to represent 1,200 pension schemes in the UK and 15 million individual fund members. Its pension fund members own £800 billion of assets. Yet, confronted by the most egregious confiscation of wealth from pension fund members and sponsoring employers in decades, it cannot bring itself to utter a syllable of censure.

It’s no use crying over spilt milk is the attitude of Chris Hitchen, the chairman, who also runs the rail workers’ pension fund. To protest would simply lead to over-regulation of the banks.

That is specious. It is partly the failure of institutional investors such as pension funds to voice concern or to pressure banks into better behaviour that has persuaded ministers to opt for the big stick of regulation. By behaving like neglectful absentee landlords (© Lord Myners), pension funds have encouraged policymakers to choose more onerous supervision.

The NAPF, which meets for its annual jamboree next week in Manchester, used to fight its corner. Until a few years ago, it regularly voiced concern about issues such as governance and boardroom pay, naming and shaming the worst offending companies. Not any longer. Instead, it is left to the Association of British Insurers, the other main trade body for institutional investors, to do battle on behalf of end-investors.

The argument that the NAPF achieves more by quiet, private lobbying of recalcitrant companies won’t wash. If we have learnt anything from the events of the past few years, it is that straying company directors have rhino hides. Only relentless public censure leading to noisy shareholder revolts has a hope of effecting real change.

The NAPF comes across these days as having the backbone of an unusually timid jellyfish. Worse, it has conspired to water down the benefits of pension fund members. It successfully lobbied the Government to alter the law on inflation-proofing of deferred pension promises. This saves sponsoring companies money. But if Britain were to face even the mildest inflation at some point in the future, then millions of Britons would face a poorer retirement and would have the NAPF to thank for it.

To boast of this as some kind of achievement, as it does in its annual report, shows how far astray the NAPF has gone.

The reason for the craven approach isn’t hard to find. The NAPF is hopelessly conflicted. It takes subscriptions not only from pension funds but from sponsoring employers and from the very industry that feeds upon pension funds — consultants, fund managers, custodians, actuaries and the rest. Four hundred of its members are suppliers to pension funds. It also relies on the industry for income from conferences and exhibitions. The NAPF board includes representatives from the industry, but there is no director who could be described as purely representing pension fund members.

With the vast majority of defined benefit (DB) pension schemes now deeply in deficit, there is a growing divergence between the interests of pension fund members and sponsoring employers. With defined contribution schemes rapidly replacing DB schemes, there is even more need for someone to fight on behalf of members, because employers no longer have very much interest in maximising returns and minimising costs.

Pension fund investment returns are now negative or negligible over any but the longest of time frames. It is imperative that costs are kept to a minimum. They reduce retirement income by as much as 40 per cent, possibly more. But the NAPF is now dominated by members either indifferent to this or with a strong interest in pushing up fees.

More than ever before, occupational pension fund members need a strong, independent voice. Unfortunately, the NAPF as presently constituted is not the body to provide it. Anyone want to set up such an organisation? Count me in as a founder member.

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