"The best performing pension could produce more than three times more pension income than the worst performing one. The really bad news is that your pension fund is more likely to be amongst the bad than the good" The Observer
The traditional attraction of with profits funds is their ability to smooth investment returns.
In years where investment returns to the fund are high the insurance company (at least notionally) puts some of the ‘excess’ profits to one side, in reserve (that is, not declaring all the profits as bonuses). In years of poor investment returns this reserve might be drawn upon to, in effect, ‘subsidise’ bonus rates. The effect is (or should be) a smoothing out of returns in bad and good years: ideal, perhaps, for risk averse investors.
However, many with profits funds suffered so badly in the late 1980s and 1990s that investments were moved from equities to fixed interest stock. This latter investment suffers few peaks and troughs to produces mediocre investment returns over the longer term, preventing competitive bonus rates form ever returning.