Rise in DC assets fails to boost confidence
The UK's combined private defined contribution (DC) pension funds reached £507bn at the end of September, rising by £21bn month-on-month due to stock market gains, but doubt remain.
According to analysis by Aon Consulting, the leading employee risk and benefits management firm. Research from Aon also reveals that younger workers are far more worried about their retirement finances than imminent retirees, paradoxically, this should be viewed as a positive development, providing evidence that young people are waking up to the pension problem, says Aon.
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 who contribute 10 percent 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 projected annual income from DC pension savings for typical workers with average pension contributions has stayed relatively stable over the last month, despite booming equity markets, this is due to a rise in annuity rates. A 30 year old worker has seen their projected income fall slightly to £21,255 (from £21,760 at the end of August), while a 60 year old has seen their projected income rise nominally to £12,086 (from £12,021 at the end of August).
Additional Aon research*reveals that, despite improvements to the nation's pension savings since the dramatic falls earlier this year, financial worries beat health, loss of status/self worth and use of additional free time as the principal retirement concern for 65 percent of workers. Surprisingly, the young are twice as concerned about retirement finance as some older workers.
Key Findings
- 71 percent of 25-34 year olds chose financial worry as their primary concern for retirement, compared to only 52 percent of 55-64 year olds and merely 34 percent of 65 year olds
- 70 percent of females selected financial worry as their primary concern compared to just 55 percent of males
- 20 percent of men are worried about their health in retirement compared with only 14 percent of women.
- Men are twice as worried (10 percent) as women (five percent) about how they are going to use the additional free time that retirement has to offer.
- Those on an average annual salary of between £10,001 and £20,000 and £20,001 and £30,000 per annum are nearly twice as concerned about finances in retirement, 67 percent and 71 percent respectively) than those in higher salary brackets - only 45 percent of those earning over £50,000 per annum.
15th October 2009
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Created on: 15-Oct-09 17:03
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