Aon Consulting: UK pension funds return to pre-recession value

The value of the UK’s defined contribution (DC) pension funds has returned to the level they were prior to the recession kicking in in September 2008, according to analysis by Aon Consulting.

The funds have overcome fluctuating investment returns during the last turbulent twelve months and a record dip to £344 billion in March this year to return to £450 bn.

Aon’s DC Pension Tracker measures the total asset value of UK workers’ DC pension accounts. It also tracks the income in retirement of individuals at different ages who contribute 10% of their £25,000 salary to their retirement savings and have an existing fund (valued as at September 2007) of £15,000 for age 30 and £150,000 for ages 55 and above.

The DC Pension Tracker for July shows total DC assets in the UK as being worth £451bn, only one billion more than their £450bn value in September 2008. This month’s figures rose by £31bn, or 6.8%, in the month to 31 July from £420bn at the end of June. The gains are largely thanks to rallies in the equity markets, and demonstrate the volatility of UK workers’ retirement savings.

Helen Dowsey, head of DC at Aon Consulting, said: “These figures look promising as we return to asset figures roughly at the same value as they were a year ago. However, this month’s figures serve to underline the volatile nature of DC investment. Someone retiring at the end of July may have a significantly higher projected retirement income than someone retiring a month before.

“These volatile conditions highlight the need for workers to pre-plan for their pension, and understand and regularly review their investments, whose value can change dramatically in a short space of time.”

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