US Edition 
Pension incomes shrink by three quarters in 15 years
Startling new research shows savers buying a pension income today are receiving a quarter of the amount they'd have got at the turn of the Millennium
Savers who are turning their retirement fund into a pension income this year will receive around a quarter of the annual payouts that they would have seen 15 years ago.
The drastic drop in income is the result of both poor-performing pension funds and plunging annuity rates.
Experts said the trend means that millions of older workers are now delaying retirement so they can build a bigger savings pot or supplement a small pension with a wage.
The research, by the Moneyfacts website, took the example of a 65-yearold man who had paid £100 a month into an average personal pension fund for 20 years. If he retired today and purchased an annuity with the proceeds of his pension pot, he would receive an annual income of £2,109. This is 73 per cent less than in 2000, when the same amount of money would have secured an annual income of £7,748. If inflation was taken into account, the collapse in retirement income would be even greater.
In April, the Government introduced new pension freedoms to prevent savers being forced into buying annuities. Savers now have the option of leaving their money invested and taking all or part of it as cash instead.
Alan Higham, an independent pensions expert and founder of pensionschamp.com, said people who retired in 2000 caught the peak of a stock market boom when annuity rates were also relatively high. "Today's pensioners are not so lucky as markets have fallen around 10 per cent since then, and annuity rates are close to an all-time low." Richard Eagling, of Moneyfacts, said: "Dreams of a comfortable retirement could easily be shattered unless individuals can either make up the pension shortfall through greater contributions or accept that they may have to delay their retirement."
The Government's overhaul of pension rules aimed to give savers over 55 access to their pension money.
But generating an income from savings is the biggest difficulty retirees face, according to pensions experts.
Almost all forms of income-paying investments are delivering historically low yields.
The traditional route of purchasing an annuity with retirement savings has become increasingly unattractive as rising life expectancies have combined with low investment returns.
To buy an annuity paying a starting income of £30,000 per year, rising 3 per cent per year thereafter for life, a 65-year-old man would now have to save £900,000.
Research by Hargreaves Lansdown, the UK's biggest broker, found that two in five savers are continuing to work alongside withdrawing some money from their pension.
The vast majority of savers aged over 55 - more than three quarters - kept the bulk of their pension money invested in stock market funds, Hargreaves Lansdown's research found, while just 7 per cent bought an annuity.
katie.morley@telegraph.co.uk