The Aon UK DC Pension Tracker dipped slightly in Q3 2024, declining from 65.2 to 64.6, reflecting lower expected retirement living standards.
The most impacted savers were younger savers, whose predicted retirement income decreased, while older savers saw less change. According to Aon, the decline was due to higher long-term inflation expectations and flat investment returns. Aon says the data aligns with the four-year average but remains below pre-2023 PLSA Retirement Living Standards levels.
Meanwhile, updates to the PLSA Retirement Living Standards and increases in the state pension caused the Aon tracker to stabilise in 2024 after experiencing volatility since 2022. It is currently just over 2021 levels and close to the three-year average.
According to Aon, older savings were unaffected by stable short-term inflation, but younger savers’ purchasing power has been diminished by long-term inflation. On the other hand, greater inflation might lead to increased pension contributions from younger savers due to higher wage growth.
The tracker declined in Q3 2024 due to flat investments and growing inflation expectations. Incomes fell by £170, or 0.5 per cent, for younger savers and by £550, or 1.4 per cent, for those over 40. 50-year-olds’ incomes were unchanged, but older savers’ stronger post-retirement returns increased their incomes by £100, or 0.3 per cent.
Older savers continue to have the lowest incomes, at 145 per cent of the minimum required, despite the April State Pension increase. Meanwhile, younger people continue to stay just above the moderate threshold, midlife savers fall midway between moderate and comfortable. However, a “comfortable” retirement standard is far off for any group.
