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Value of DC pensions drop by 42 million in a month

Britain's defined-contribution (DC) pension assets plunged by 42 billion in February, losing 10% of their value.

The value of Britain's 3.7 million UK workers' DC pension accounts now stands at £368 million, compared with £410 million at the end of January, according to Aon Consulting.

Before the credit crunch and recession in September 2007, the value stood at £550 million.

Aon Consulting reports that a 60-year-old, on a salary of £25,000, paying pension contributions of 10%, will see their pension fall by 40% so they receive £10,270 a year, instead of £17,100 forecast in September 2007.

Helen Dowsey, principal at Aon Consulting, said: "The double whammy of falls in equities and worsening annuity rates have hit DC pension savers hard. People need to take an active role in reviewing their pensions to deal with the current situation.

"We encourage people to be creative in the way they face retirement. It might be appropriate to convert only a proportion of your pension fund to an annuity now and convert the remainder at a later date. Or, it may be possible to continue in paid work post- retirement, although the recent European Court of Justice decision to allow mandatory retirement in the UK will impact the number of older employees who can remain in their jobs after the age of 65."