The total value of the UK’s pension savings is just 2% below its all-time high following the recent rally in financial markets, a report has concluded.

According to the inaugural “Why Markets Matter” report from Close Brothers Asset Management, DC pension savings peaked at an all-time high of £556bn in the first quarter of 2015. Market turbulence pushed them to a low point of £523bn in January 2016.

Researchers, who analysed the impact of market movements on UK pension pots, found the value of the UK’s defined contribution pension savings stood at £546bn at the end of April, just £10bn shy of its record high.

The £23bn rebound since January would provide an entire year of extra income in retirement for savers, the authors of the report said.

Nancy Curtin, chief investment officer at Close Brothers Asset Management said: “To the growing legions of people in the UK who must take responsibility for their own pensions in retirement, what happens in the markets really matters.

“Over the long term, share prices and real assets (like property) rise in value as economies grow. Most asset classes provide a healthy income too. But on their upward journey, however, there are often bumps in the road, some of which can give quite a financial jolt for a time.

“The start to the year was very bumpy indeed, with over $4trn eradicated from global stock markets at 2016’s worst point. But the recovery in the last three months highlights the importance of staying invested, rather than overreacting to volatility and exiting the market - or avoiding risk altogether.

“It is time in the market, rather than timing the markets, that counts. If we simply stuffed our mattresses with cash to save for our retirement, we would have to put by an unaffordable proportion of our incomes every year. It would be impossible to balance a decent standard of living today with our future needs in retirement.”