Research by Investment Life & Pensions Moneyfacts has revealed the average annual income of a standard annuity for a 65-year old male fell by 11.5% during last year, representing the biggest yearly fall since 1998.
The switch to gender neutral pricing on 21 December 2012 is believed to have eased the blow for female annuity policyholders, with equivalent incomes falling by 6.1% in 2012.
Incomes for annuities have fallen in 15 out of the last 18 calendar years, with the average annual annuity income for a male aged 65-years old reducing by 56% since Moneyfacts first started to research annuity rates back in August 1994.
The equivalent income for a 65-year-old female has reduced by 50% over the same period.
Editor of Investment Life & Pensions Moneyfacts, Richard Eagling, said: "Record low gilt yields sparked by further Quantitative Easing and uncertainty over the Eurozone combined with the switch to gender neutral pricing led to a high volume of repricing amongst annuity providers throughout 2012.
"The result of this activity has been a fifth consecutive year in which average annuity income has fallen.
"As to the future direction of annuity rates, it is fair to say that the full impact of the switch to gender neutral pricing has yet to play itself out.
"It is still very early days for the new pricing model and in the short term a period of considerable flux is anticipated as providers look to readjust their rates during the first quarter of 2013 in order to drop themselves back into the strategic pricing positions they favoured before gender neutralisation."
Moneyfacts.co.uk has partnered with Premier Retirement Services to bring you our pension annuity comparison site. Premier Retirement Services specialise in pension annuities and could help you increase your income in retirement depending on your medical situation.
Learn about your annuity options. For help or to compare annuity quotes online call the Moneyfacts Annuity Service: 01737 233435
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.