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Annuity rates have fallen to record lows following a decline in gilt yields.

Figures from Moneyfacts.co.uk revealed that income from an average annual standard level without guarantee annuity hit £410 on September 10, 2019, a decline of 10.2 per cent from January 1, 2019.

This was based on income received by a 65-year old with a £10,000 pension pot buying a single life annuity.

At the higher purchase price of £50,000, the average standard annuity income fell by 11.4 per cent to reach £2,237 in September.

Income from an average enhanced annuity dropped by 10.2 per cent since January to hit £475 on September 10, based on income for a 65-year old with a £10,000 pension pot.

At a purchase price of £50,000, the expected income dropped 11.4 per cent to reach £2,393.

The drop means the average annuity income is now 1.2 per cent lower than its previous all-time low recorded in September 2016, following the impact of the EU referendum result.

That time rates for £10,000 standard annuities for a 65-year-old were £415 and for an enhanced annuity £480.

Richard Eagling, head of pensions at Moneyfacts.co.uk, said: “The security that annuities offer makes them an integral part of the retirement income landscape. However, the pricing trends at the time of annuitisation are critical to retirement income outcomes.

“Annuity rate risk, whereby individuals face the danger of locking into a low income at the time they retire, has always been a key retirement risk, but it has increasingly come to the fore again in recent months.”

He added: “Given the prevailing political and economic uncertainty, there are obvious merits in a retirement product that can guarantee a regular income for life – the question is whether current rates are still a price worth paying for the unique qualities that an annuity brings.”