The likelihood of securing a comfortable retirement has taken a further blow, after research from Moneyfacts.co.uk revealed that annuity rates have hit an all time low.
Many retirees rely on an annuity to fund their life after work, but average returns are currently smaller than ever before.
An annuity offers a monthly income to those who have built up a pension pot over their working lives, but rates have fallen steadily over the summer months as a result of re-pricing activity from a number of providers.
The average rate for a male aged 65 purchasing a level without guarantee annuity (based on a £10K purchase price) has decreased by 6.3% since last August, whilst the equivalent female annuity has seen a 5.6% reduction over the past year.
The latest reductions mean that the average male annuity rate has dropped by a massive 45.5% over the last 15 years, whilst female rates haven fallen by 41.8%.
"With every passing month the outlook for those approaching retirement appears bleaker," commented Richard Eagling, Editor of Investment Life & Pensions Moneyfacts.
"There has been a spate of annuity re-prices over the summer months which has unfortunately left rates at record lows. In a few months time the first baby boomers will hit retirement.
"Often perceived as the lucky generation, they are likely to face a rude awakening when they come to secure their retirement income via an annuity.
"With gilt yields still low and life expectancy increasing we can expect annuity rates to fall further still. Tomorrow's pensioners face a desperate battle to secure a comfortable retirement."
With finding the right annuity more important than ever, it is worth taking the time to some research.
Find the best annuity for you - Compare annuity rates
If you can't find exactly what you're looking for there, we've also recently partnered up with Premier Retirement Services, giving you access to their online annuity planner service.
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 Any products featured may be withdrawn by their provider or changed at any time.
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