UK's DC pension savings rise 25 per cent in 2009

The UK's combined defined contribution (DC) pension savings have rebounded by more than GBP103bn (or more than 25 per cent) since this time last year, according to Aon Consulting.

The total value of DC assets stood at nearly GBP505bn at the end of November, up GBP16bn compared with the end of last month.

Aon's monthly 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 that contribute 10 per cent of a GBP25,000 salary to a DC arrangement and have an existing fund (valued as at September 2007) of GBP15,000 for age 30 and GBP150,000 for ages 55 and above.

Richard Strachan, senior consultant at Aon Consulting, said: 'It's been another rollercoaster 12 months for UK workers.

'The nation has seen its combined savings fluctuate from a year-low of GBP344bn during March to a high of GBP518bn during October.

'Additionally, not only have insurance companies cut annuity rates, but ongoing fluctuations within their rates have added further confusion for the average worker trying to decide when to retire.

'A 65 year old looking to retire can now expect to receive an annual income of approximately GBP8,920, which is more than 20 per cent higher than the GBP7,275 they would have received in November 2008.

'If the same pensioner had retired in February, however, they would have received an annual income of just GBP6,460.

'Such fluctuations continue to demonstrate the uncertainty facing British workers, leading to understandable apprehension.

'With this unprecedented volatility, it is no wonder that people feel their decisions about retirement are like throwing a dart at a map.

'Aon's research indicates that in the majority of companies in the UK, more than 80 per cent of workers automatically enrol in the default fund recommended by their employer, yet only 11 per cent of companies have seriously looked at the makeup of their DC scheme during the recession so far.

'At this point in time, sponsoring employers should be making every effort to help staff to review their existing provisions,' concluded Strachan.

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