Defined contribution (DC) pension pots have taken a further battering over the last four weeks with a 30 year old’s annual pension income decreasing by £518, and a 60 year old’s by £358 per year, according to Aon Consulting.

The employee benefits and risk management firm said the predicted retirement income of a 65 year old now falls below 50 per cent of the adequate standard of living.

The Aon DC Index showed that a 65 year old, based on data from 31 July 2010, can expect a pension pot £259 lighter than at 30 June 2010.

“Though we have seen some improvement to economic circumstances in the past six months, pension pots are in only marginally better shape than this time last year and due to the volatility in stock market activity, pension pots shrank once again during the last month,” said Richard Strachan, senior consultant at Aon Consulting.

“As some areas of the economy forecast growth and others continue to struggle, making the right investment choices is key for any pension investor, whether individual or institutional. Employers should ensure their pension schemes – and their default funds, in particular – are invested wisely to maximise the green shoots of recovery. 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,” he warned.

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