Credit crunch sees £160bn wiped off UK pensions pots in past year

Nearly £160bn has been wiped off workers’ personal pensions pots in the last year, research has shown.

A report by insurance firm Aon found the value of employees’ defined contribution (DC) pensions has dropped by nearly a third since October 2007 from £552bn to £395bn as a result of the credit crunch.

The erosion in value of DC pensions is the equivalent of a £46,417 loss for each of the 3.4 million workers who pay into such schemes.

Helen Dowsey, principal in the benefit solutions division of Aon Consulting, said the impact was largely cosmetic.

“It may appear a double blow to workers that not only are they facing more of a struggle to make ends meet, but the economic turmoil is also seemingly eating into the money they have been putting aside for retirement,” she said.

“However, most workers will have the fortune of time on their side as their retirement will be many years away, enough time to weather the current storm.”

A study last week found thousands of employers with DC pension schemes will close them to new members when the personal accounts system launches in 2012.