Defined contribution (DC) pension savers saw an improvement in their expected retirement outcomes in the final quarter of 2025, despite ongoing geopolitical and market volatility, research from Aon has revealed.

Aon's DC Tracker rose from 71.3 to 73.4 between October and December 2025, indicating that the expected future standard of living in retirement increased compared to the previous quarter.

The improvement was primarily driven by positive benchmark investment returns across major asset classes, with all saver groups seeing an uplift in projected retirement income over the period.

Younger savers benefited the most in percentage terms, reflecting both strong investment performance and higher assumed future returns, while older savers closer to retirement saw more limited gains due to reduced exposure to future return assumptions.

More broadly, Aon said DC savings proved resilient throughout 2025, with expected retirement incomes rising over the year despite a challenging backdrop marked by geopolitical tensions and market uncertainty.

Outcomes were also supported by a relatively modest increase in the Retirement Living Standards (RLS), alongside the April rise in the state pension, which more than offset higher targets at minimum and moderate levels.

However, Aon warned that the outlook remained uncertain in 2026, as renewed geopolitical pressures and rising energy prices risk driving inflation higher, potentially eroding the real value of retirement incomes and placing further strain on household finances.

Aon partner and head of UK retirement policy, Matthew Arends, cautioned that these pressures could make it harder for savers to maintain or increase contributions.

“The recent jump in oil and gas prices is driving another surge in inflation, which will add more pressure to household budgets,” he said.

“Understandably, people may find it difficult to maintain or even increase pension savings against this backdrop.”

He added that anticipated changes to the RLS later this year could further affect savers’ perceived position, effectively raising the bar for what constitutes an adequate retirement.

“Any change to the RLS, particularly an increase, will require DC savers to reassess their positions and consider whether additional savings, or working longer, may be required,” Arends continued.

“If earlier updates are anything to go by, positive investment returns can quickly be undone when the target standard increases, meaning many savers may feel a comfortable retirement slipping further out of reach.”

Over the quarter, the strongest gains were seen among mid-career savers, with a typical 40-year-old experiencing an increase of around £1,050 per year (2.6 per cent) in expected retirement income, while a 30-year-old saw an increase of around £1,000 per year (2.7 per cent).

By comparison, a 50-year-old saver saw a more modest increase of around £500 per year (1.3 per cent), while outcomes for those nearing retirement were broadly flat, as positive investment returns were largely offset by lower future return expectations.

Despite these improvements, Aon noted that older savers were still expected to be the worst-off in retirement relative to the RLS, highlighting ongoing challenges around adequacy, particularly for those approaching retirement with limited time to adjust their savings behaviour.

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