ISO8859_1 vs UTF-8 Performance?

I am not a PostgresSQL user but would like to hear from users who have
configured their database to use the UTF-8 charset, especially any users
using the case and accent insensitive collation.

I am using a open source SQL server at this time using ISO8859_1 and
performance is excellent but I recreated the structure using UTF-8 and
imported the data in a test environment and the performance was totally
unacceptable. Example:

An unoptimized (no index) query under ISO8859_1 runs in about 15ms and took
almost 6.5 seconds under UTF-8.

Creating an index did help but performance was still unacceptable. Using
the same query under ISO8859_1 now took a reported 0ms while taking 109ms
under UTF-8.

Thank you for your time