DC pension funds stage recovery
by Gill Montia
Story link: DC pension funds stage recovery
New research from Aon Consulting shows the value of the assets in employees’ defined contribution (DC) pension funds rising sharply in July, to reach a combined £451 billion.
The recovery, which reflects rallying share prices, represents an increase of almost 7% on June and puts the combined worth of UK DC funds £1 billion ahead of their September 2008 level.
Unlike members of defined benefit schemes, DC pension holders are reliant on stock market and other investment returns for their retirement income.
Aon spokeswoman, Helen Dowsey, ponts out: “Someone retiring at the end of July may have a significantly higher projected retirement income than someone retiring a month before.”
She adds: “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.”
DC schemes are increasingly replacing defined benefit pension arrangements for UK workers.
A report published earlier this week by consultancy firm, Watson Wyatt, suggests that half of all defined benefit schemes will close within the next three years, as costs escalate due to increased longevity.
According to Watson Wyatt, 9% of companies have already shut schemes to existing members, but the figure could rise to 50% by 2012.