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Defined contribution pensions perk

Defined contribution pensions perk

Category: Pensions

Updated: 26/05/2009
First Published: 26/05/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
New analysis has shown that the UK's defined contribution (DC) pensions assets increased for the second consecutive month, having risen 10 per cent to a combined total of £418 billion.

According to Aon Consulting's DC Pension Tracker, which measures the asset value of UK workers' pension accounts, the welcome improvements are due to a bullish performance by the global equity markets. Helen Dowsey of Aon Consulting said global stock markets had seen one of the strongest rallies ever over the last month.

While the outlook of the average UK pensioner is certainly improving, the losses suffered in the economic downturn mean a further 32 per cent rise is needed if the value of DC assets are to return to the £550 billion seen in September 2007.

The recent stock market rally means that a 65 year old fully invested in equities will have seen their total pension rise by 3.7% over the last month. However, it is still 40% less than what it would have been worth just over a year and a half ago.

Helen Dowsey, Principal said: "Unfortunately because annuity rates are still low, this has wiped out some of the investment gain."

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