- Friday, 03 August 2012
Experts have said that the Bank of England's £375 billion money-printing policy has triggered a "death spiral" in pensions.
This has led to the worst retirement pay-outs in history, they claim.
Annuity rates - which dictate how much a worker gets from their pension pot for the rest of their lives - has hit an all-time low and are likely to keep slipping.
Figures show that a 65-year-old man who retired today with a pot of £100,000 would get just a third of the pension he would have received 20 years ago.
He could have purchased an annuity - or income for life - of £15,000 per year. But in March 2009, when the Bank started quantitative easing, he would have got just £7,200.
Today, he would receive a rock-bottom deal of £5,660 - the lowest annuity rate since records began.
There are warnings this could slip even lower if the Bank of England increases its quantitative easing policy.
Insurance policies depend on gilts to pay out annuities so it is costing them more - giving less money to pensioners through lower annuity rates.
The Bank of England has pledged not to increase its quantitative easing programme and says it will hold base rate at the 2009 frozen level of 0.5 per cent.
But experts believe the base rate will probably be cut further in November.
Vicky Redwood, of Capital Economics, said: "We expect a cut to 0.25 per cent, but a bigger reduction to just 0.1 per cent or so is possible."
Hargreaves Lansdown, the financial advisers which compiled the shock figures, said annuity rates are likely to become lower.
Laith Khalaf, of the company, said: "To believe annuity rates are going to rise anytime soon would be to have false hope."
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