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Daily Insurance Industry News
Monday 23rd of April 2018
October 27, 2008

Aon estimates 28% decline in DC pension assets

by Gill Montia

Story link: Aon estimates 28% decline in DC pension assets

Aon estimates 28% decline in DC pension assets

Research from Aon Consulting indicates the extent to which the credit crisis has impacted on the pension pots of Britons who are not members of final salary schemes.

According to Aon, turbulent markets and plummeting share prices have wiped billions of pounds of the value of employees’ defined contribution pension funds.

Around four million people save for their retirement in such schemes, which are provided by their employers.

Contributions from employees and employers are invested in shares and bonds and when a scheme member reaches retirement age their pension pot can be used to buy an annuity that will provide an income for life.

However, the size of the pot depends on the performance of the shares and bonds in which the money has been invested.

Aon’s research suggests that the value of defined contribution assets has fallen by 28% in the past 12 months, taking the collective worth of such assets down from £552 billon, to £395 billion.

The firm also estimates that £6.7 billion was paid into defined contribution schemes during the year.

Aon spokeswoman, Helen Dowsey, points out that many employees are not close to retirement age and therefore have enough time to weather the current storm.

However, she suggests that those nearing retirement seek professional help in their financial planning and consider working beyond their original retirement date.

 

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