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Private sector empty pensions pot

Falling annuity rates and the volatile stock market mean that many private sector workers retiring today will be 18 percent worse off than those who retired three years ago.

Figures from actuarial consultancy Aon Hewitt show that the average pension pot is around £56,000. The firm's John Foster said: 'If the individual, aged 60, takes 25 percent of this as cash, it would leave around £42,000 to buy the pension. In 2008 this sum would have bought just over £1,400 a year, compared with just under £1,200 today. The underlying performance of the funds over that time would have been growth of 11.7 percent.'

So when it comes to company pensions, best not have your head in the sand. Review what your money is being invested in, and check that it's right for you. 'The key thing to review regularly is what type of investment your pension fund is invested in. How much risk do you want to take? You should consider what type of fund will give you the highest return for the amount of risk you are prepared to take,' said Mr Foster.

He added: 'Employees should regularly review how much is going into the plan and use the increasingly widely available online tools to project what this might give them as a pension. These can also show what additional pension could be achieved by increasing contributions, subject to being able to afford them.'

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