Projected pension income for private savers continued in freefall during July 2010, according to new data by pensions consultancy Aon Corporation. The latest projections underline the need for ongoing pension reviews and financial advice, Aon said.
Aon’s monthly DC Pension Index checks the value of pension income at age 65, from private pensions, for individuals in three separate pension savings scenarios. Aon projects pensions income from contributions equalling 10% of a £25,000 salary into a defined contribution pension scheme for a 30-year-old, a 60 year old and a 65 year old. This is based on the 30 year old having a pension pot today of £15,000, while the savers at 60 and 65 have pots of £150,000.
During July, the projected annual pension income at age 65 for the 30-year-old fell by £518, from £19,863 to £19,344.
The projected pension income for the 60-year-old retiring 5 years from now has been modified downwards by a further £358, from £10,824 to £10,466. Income for the 60-year-old had already fallen by £3,000 since 2008, Aon stated in a previous report.
The projected pensions income for the 65-year-old dwindled by £259, from £7,925 to just £7,666 per year during July.
Aon points out that this level of income is less than half the recent estimates of £14,400 for an adequate standard of living, calculated by the Joseph Rowntree Foundation*.
In the light of the general downward trend in projected pensions savings and pension income, for both younger savers and those approaching retirement, Aon has stressed the ongoing need for those making pension savings to take pension advice in regular pension reviews with their financial adviser.
“Individual pension investors should keep a watchful eye on their pension pots to ensure their retirement plans are on track, and make suitable provision for their future,” said Aon.
*(Read article Pensions income from state inadequate for modern living)
