The total retirement income from an annuity purchased using a £50,000 pension pot has fallen by £14,180 since January 2010, according to figures published by MGM Advantage yesterday.
Three years ago, the average annuity for a 65-year old with £50,000 saved in a pension would have paid an annual income of £3,495.
But the consultancy's latest Annuity index shows that the same pension pot today would generate an annual income of £2,786 - 20% less and, over the average retirement of 20 years, a £14,180 reduction.
MGM Advantage's figures indicate that average annuity rates fell by 2.5% in the last quarter of 2012 alone - the seventh consecutive quarter they have dropped. Last year saw the average annual income for a 65-year-old man buying a standard annuity fall by 11.7%.
Aston Goodey, distribution and marketing director at MGM Advantage said the fall in annuity rates over the past year was down to factors including historic low returns on government gilts and the introduction of gender neutral insurance pricing.
'Improving longevity and Solvency II will continue to apply pressure on rates, and we expect a further period of uncertainly as the dust settles on the introduction of gender neutral prices,' he added.
MGM Advantage noted that there were still options for retirees which could increase their income when they stop working. These include alternatives such as investment-linked annuities, which tie retirement income into the value of investments like stocks and shares.
'Other options include enhanced annuities, which take health and lifestyle into account, and can increase the annuity income by as much as 30% or more,' Goodey added.
