The Aon UK DC Pension Tracker fell in Q3 2025, dropping from 70.0 to 68.2, with younger savers seeing the largest falls in projected income and older savers seeing a small increase.
According to Aon, the overall decline reflects lower expected future investment returns and the latest changes to the Pensions UK Retirement Living Standards, with the April state pension uplift offering only a partial offset.
The latest RLS update showed smaller adjustments than in previous years. The minimum standard fell by £1,000 to £13,400. The moderate standard increased by £400, which is less than the state pension uplift. The comfortable level rose by £800, mostly absorbed by the higher state pension.
Aon says market volatility also influenced outcomes after geopolitical tensions and tariff announcements affected performance earlier in the year, although markets recovered during the quarter.
Aon reports that projected outcomes fell by £1,085 (2.9 per cent) for the youngest saver and by £750 (1.8 per cent) for the 40-year-old. A 50-year-old saw a £200 (0.5 per cent) increase, and the 60-year-old recorded the largest rise at £550 (2.4 per cent).
Aon also found that older savers remain closest to the minimum Retirement Living Standard at around 150 per cent while younger savers stay above the moderate level and midlife savers sit between moderate and comfortable.
Aon partner and head of UK Retirement Policy Matthew Arends says: “After several years of sharp increases to the Retirement Living Standards, savers can take some comfort that the 2025 update is more restrained. For pensioners aiming for minimum or moderate living standards, the higher State Pension will more than cover the increase. However, it’s important to remember that household budgets remain tight and inflation continues to be above the Bank of England target. For many households, saving for retirement continues to be a challenge.”
“Pensions are, of course, a long-term investment. Market volatility is inevitable over such a lengthy time horizon as a working lifetime. For younger savers, this can actually work in their favour, allowing them to benefit from periods of lower asset prices by continuing to invest regularly. Over time, this can smooth out the impact of fluctuations and potentially enhance long-term returns through pound-cost averaging.
“Nevertheless, many savers will find the swings in the value of their retirement savings concerning, particularly as retirement approaches. Ensuring your investments gradually moves towards lower-risk assets (as is common in most default funds) can help protect the value of your savings from sudden market swings when you need the money most.”
