The projected pension pot of an average 30 year-old when he or she retires at age 65 has shrunk by 544 over the past month.

According to Aon Consulting, a 60 year-old and a 65 year-old witnessed a modest increase of £52 and £61 respectively in their projected annual retirement income.

The minor increase in pension income for 60 and 65 year-olds, despite a small drop in UK and overseas equities during the past month, is a result of a rise in the value of the gilt market. The pension pots for 30 year-olds are assumed to have a greater exposure to equity markets, hence the continued fall in projected retirement income for that age group.

The Aon DC Index follows the projected retirement income of individuals at different ages who contribute 10% of a £25,000 salary to a defined contribution (DC) pension arrangement and have an existing fund (valued as at September 2007) of £15,000 for age 30 and £150,000 for ages 55 and above.

Based on data collected on 31 August 2010 compared with a month previously, 31 July 2010, the projected annual retirement income of typical DC pension investors at different ages is as follows:

• 30 year old: from £19,344 to £18,800 (£544 decrease)
• 60 year old: from £10,466 to £10,518 (£52 increase)
• 65 year old: from 7,666 to £7,727 (£61 increase)

Chris McWilliam, senior consultant at Aon Consulting, said: "While this month’s figures paint a more positive picture for those closer to retirement, projected pensions for 30 year-olds continue to be negatively impacted by ongoing volatile equity markets.

"The variation in figures month on month for these different age groups continues to underline the importance of moving to more secure and stable investments, such as government bonds, as a member approaches retirement in order to minimise the risk exposure of their pension to stock market fluctuations close to their intended retirement age. Failure to do so could mean that such members have to work longer or simply accept lower incomes in retirement."