HR Magazine - Election week decimates the retirement income of older employees

People who retired during the 'week of indecision' could be nearly 800 poorer than people retiring the week before or after the election, according to data from Aon Consulting.

The Aon DC Index follows the projected retirement income of individuals at different ages that contribute 10% of a £25,000 salary to a DC 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. This retirement income is based on converting pension savings to an annuity.

Aon compared the retirement income figures for different age groups on a day of campaigning (30 April), the indecisive Results Day (7 May) and the first full day of the new Government (12 May). Results day witnessed significant stock market losses; Aon's numbers reveal how external factors can have significant impact on the markets and therefore on your pension pot. Aon urges retirees to carefully consider when they choose to retire in alignment with elements on the wider political, social and economic agenda.

Richard Strachan, senior consultant at Aon Consulting, said: "The past two weeks are the perfect illustration of how external factors impact the stock market's volatility and therefore peoples pensions.

"Savings were looking relatively steady in the week running up to the election but on results day, stock markets took a nose dive and retirement income suffered significantly. For UK retirees, the amount lost is significant and could be the cost of a cruise or a golf membership.

"Happily for savers, Wednesday this week saw a return to more steady levels once the country's limbo had been resolved."

Retirement income projections over general election

Based on data collected, the projected annual retirement income of typical DC pension investors at different ages around the time of the election is as follows:

30 year old: