Expect more volatility in investment markets this year.

That's the forecast of pensions expert Nicholas O'Shea, of Pharon Independent Financial Advisers, based in Harbledown, near Canterbury.

Mr O'Shea believes that although shares ended on a high in December after a bear run in late 2008/early 2009, it is not inevitable that equities will continue to rise.

He also warns that pensions will be affected by more legal changes.

"2010 is certainly looking like an interesting year with continual pension legislative changes and continuing volatility in the investment markets", he said.

But on the more positive side, he expects the overall economic situation to improve, with an encouraging increase in UK manufacturing. Economic improvement is expected to put the current low interest and inflation rates under pressure.

Mr O'Shea added: "We believe things will continue to improve and will see an increase in manufacturing sector in the UK. This in turn will bring interest and inflation under closer attention."

At a recent seminar hosted by Pharon at the St Lawrence Cricket Ground, Canterbury, financial experts were told that employers should brace themselves for the extra cost of contributing to all employee pensions from 2012.