People reaching retirement are four per cent worse off than those that drew their pension last year, according to research.
The Prudential Annuities Index indicates that a man reaching retirement with a £100,000 fund will receive an average pension income of £6,540.
However an individual who began relying on a pension in 2005 would have been better off, with around £6,730 a year.
Women face an even bigger drop in their pension from last year, of around £220.
Aston Goodey, head of retirement for Prudential UK, commented: "Pensioners retiring today are receiving lower incomes than those retiring a year ago mainly because the continuing decline in gilt and bond market yields has reduced conventional annuity rates across the market."
The difference between the best and worst conventional annuity available upon reaching retirement is almost 20 per cent, with the worst off receiving around £5,860 a year from a £100,000 fund, which is £1,070 a year less than the best deal.
This news is another potential blow to future retirees, as the current pensions crisis has been headline news across the UK.
The Pensions White Paper, which has recently been published by the government, contains plans to restore a link to earnings by 2012, counterbalanced by raising the retirement age to 68.
Pensions hit by annuity decline, experts say
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Pensions hit by annuity decline, experts say
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