UK pension pot drops by billions
27 October 2008
The value of the UK pension pot has dropped in value by almost a third, according to new research from a pension consulting company.
Findings from Aon suggests that the value of employees' defined contribution pensions has nosedived from £522 billion to £395 billion as shares have fallen, which could affect around four million people holding such savings schemes, reports the BBC.
A defined contribution scheme sees both workers and their employers put money into the pension, but these donations are invested in shares and bonds making the final value of the pension not certain as it depends on the market performance of a firm.
Helen Dowsey, of Aon Consulting, told the BBC that the news was a "double blow" to workers as not only are people struggling to survive the economic turmoil but the downturn is also "seemingly eating" into money saved for retirement.
Retire Plan says that defined contribution pensions funds can have the advantage of allowing participants to benefit from good investment performance but also points out that those same investments good bear a certain amount of risk.
