UK employees retiring in 2009 may be forced to live on less than half of the average yearly wage, according to Aon Consulting.

The employee risk and benefits management firm's DC Pension Tracker for August shows that those aged 60 can expect to retire on £12,021 per annum, equating to £231 a week. This figure is 52 per cent less than the average UK wage in 2008, of £24,908, according to the Office of National Statistics.

At the end of August, the projected pension income for typical workers with average pension contributions was £8,816 per annum for a 65-year-old worker retiring with only DC savings, and £21,760 per annum for a 30-year-old worker.

The Aon DC Pension Tracker looks at the total asset value of UK workers' DC pension accounts, and also tracks the income in retirement of individuals of different ages who contribute ten per cent of their £25,000 salary to retirement savings, and have an existing pension fund of £15,000 for age 30, and £150,000 for ages 55 and above.

"While it seems the UK economy is experiencing some green shoots, UK workers with DC pensions show only a slightly improved situation from a few months ago," commented Helen Dowsey, head of DC at Aon Consulting. "Although a well-managed DC pension undoubtedly has the potential to offer a good level of retirement income, the onus is on the member to be proactive in order to build and safeguard their investments.

"Unless markets not only make a full recovery and continue to rise even further, UK workers and retirees will need to make some very difficult decisions. People should be very realistic about the income they will need in retirement and about the age they will be able to afford to retire, and must ensure their pension savings are adequate to meet their needs."

Dowsey added that people must exercise their right to the Open Market Option, and shop around for the best annuity. "Many people do not realise that there can be several thousand pounds of difference between the best and worst annuities, or that the initial reduction in income on an inflation-linked annuity might actually leave you with more money in the long-term.

"Those approaching retirement imminently should consider investing in professional independent financial advice to see what can be done to boost their retirement income. It could even be worth considering delayed retirement."

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