The Aon UK DC Pension Tracker rose from 67.9 to 70.0 in Q1 2025, driven by higher return assumptions for younger savers, while older members faced declines due to weak markets and lower post-retirement returns.
The youngest model saver saw a £2,050 (5.9%) boost to expected annual income, while the 40-year-old saw a £1,400 (3.6%) increase. Both benefited from improved long-term return assumptions.
But the 50-year-old’s projected income fell £950 (2.5%), while the 60-year-old saw a £200 (1.0%) drop, due to weaker market performance and lower post-retirement return expectations.
Aon said the figures highlight the growing gap in outcomes between younger and older DC members, driven by differing sensitivities to market volatility and time horizons.
Aon associate partner Steve Leigh says: “This quarter’s figures again highlight the importance of focusing on the long-term when it comes to thinking about pension investments – and particularly for early- to mid-career savers. Short-term market shocks may cause an immediate change in the value of their savings, but the Aon UK DC Tracker shows that future expectations of returns paint a different, and more complex, picture for expected outcomes.
“Understandably, savers planning for retirement may be uncomfortable with relying on unpredictable future return expectations – particularly when witnessing falls in the value of their own savings. However, savers should remember the ups and downs of markets are a normal part of investing.
“These are a step in the right direction, but it will be some time until these changes come into force for all DC pension schemes. In the meantime, DC savers who are approaching retirement in the short-term will still face the challenge of selecting the most appropriate way to access their savings and so schemes should consider whether they are offering appropriate levels of support in this area.”
