Pension savers with defined contribution pension plans urgently need to monitor the way their funds are invested, to ensure that they will not be ‘let down’ by the performance of their pension fund.
Pensions specialist Aon Consulting has this week revealed that recent volatility on the stock markets has created great uncertainty over the value of pensions in defined contribution schemes.
Aon revealed that a 65-year-old retiring on 31st October 2009 with a pension fund of £150,000 would receive an annual retirement income of £8,593.
However, if the same worker had retired six months earlier on 30 April 2009, they would have received only £7,133, reducing their retirement income by over £120 per month.
Due to volatility on the stock market, the total value of UK defined contribution pension plans fell during October 2009 by £18bn, to £489bn, according to the Aon report.
Aon’s senior consultant Richard Strachan, said: “It is vital for workers to take an active interest in their retirement savings, evaluating whether they are invested in the right pension funds for them, and to have some very clear goals and a strategy to achieve them.â€
Employees had to obtain clear information about all the options available with regard to their company pensions, in order to make informed decisions that are right for their circumstances, Strachan said.
