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Aon analysis shows tough task for pension savers

Nine months of sustained market gains are needed to restore pension assets to 2007 levels, according to Aon Consulting.

Analysis by the company shows that while the UK’s defined-contribution pension assets have increased for the third month in a row, for many workers in the latter stages of their careers, projected annual retirement income levels are still significantly down compared with two years ago.

Continued gains in global equity markets over the last few months mean that some of the losses which have been suffered by savers since the start of the credit crunch have been recouped.

However, Aon believes that there is still a long way to go, with a further 28 per cent increase required to bring defined-contribution assets back to their combined value of £550bn in September 2007.

Aon’s DC pension tracker measures the income in retirement of individuals at different ages who contribute 10 per cent of a £25,000 salary towards their retirement savings and who have an existing fund of £15,000 for age 30 and £150,000 for ages 55 and above.

A 30-year-old worker’s projected annual pension will have increased by 5 per cent to £21,010 per year over the past month.

A 55-year-old person who is fully invested in equities will have seen a total pension rise of 9 per cent and can expect to receive £14,491 a year.

Senior consultant Richard Strachan comments: “Relying on stockmarket rallies is far too risky for those within 10 years of retiring.

“We urge these workers to take positive action to ensure an acceptable standard of living in retirement. They can not just leave it to a reliance on the markets’ continued rally by the time they retire.”


The fast line

Last week, former BM Solutions managing director Michael Bolton claimed up to 80 per cent of HBOS loans were approved without full proof of income before the credit crunch.

Switched on

Recent announcements from Barclays, BP, British Airways and Royal Mail about the future, or possible future, of their pension schemes highlight the dramatic changes sweeping through the UK pension system.


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