A staggering £40million has been wiped off the value of Hammersmith and Fulham Council's pension fund according to leaked documents.

From a high of £463million in August, it fell to a low of £422.2million last Wednesday, a drop of 8.8 per cent. In just two days last week, the pot plunged by £12million.

Another £950,000 of future pensioner's cash has been invested in three institutions that have failed or been forced into takeovers - Lehman Brothers, AIG and Merrill Lynch.

The council is blaming the credit crunch for the loses but David Webb, who is a member of Hammersmith and Fulham Coalition against Community Care Cuts, is concerned.

The 57-year-old of Lime Grove, Hammersmith said: "Measures the council might take to bridge the gap in the fund are what worries me. If there is a shortfall, I would suspect they would rather cut services than increase Council Tax and I would find that extremely concerning."

A council spokesman said pensions would not be affected and that there will be no impact on Council Tax or services until after 2010, adding: "The recovery would be over 25 years and it is hopeless to look at a snapshot of the funds value over a short period."

He added that since October 8 the markets have 'recovered a bit' and the pension fund has 'probably done so as well' but said there was 'uncertainty' about what would happen to the £950,000.