UK - Investments in defined contribution pension funds may have seen positive returns for three months in a row but it will take at least another nine months of similar returns to pull assets back to 2007 levels, according to analysis by Aon Consulting.
Details of the firm's DC pension tracker reveal assets rose 3% in May thanks to improved performance in the global equity market, raising the collective assets of workers in UK DC plans to £430bn (€501.9bn), and have pulled back substantially from the severe losses experienced in March this year - when total assets fell to below £350bn.
That said, there is still some way to go before pension plans recover to the peak of September 2007, when DC assets amounted to £550bn, as investments need to earn another 28% to hit that target.
Further analysis of the expected income pensioners can expect at retirement suggested older workers investing 10% of their £25,000 salary would received a much higher return than younger members investing the same amount.
Yet the final predicted annual payout for someone aged 60 and fully invested in equities would be approximately half what younger people could receive, as they have much less time to pull back those investments, while a 60 year-old invested in bonds would have fared better.
A 30 year-old would have seen their pension increase by 5% to £21,010 a year in May, while a 55 year-old would have earned 9% to receive a £14,491 a year - £1,171 more than the £13,320 projection seen in March. A 60 year-old invested in equities would have received 9.2% over the last month to increase the annual pension to £10,782 while a 60 year-old in "non-equity investment" would have received £13,051 a year.
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