The size of pension pot needed to buy a male annuity has gone up by almost a third between December 2009 and March 2013, a report from the Office for National Statistics reveals.
The ONS Pension Trends report, published this week, shows that in order to receive an annual income of £5,000, a 65-year-old single man would have needed a pension pot of £118,000 in December 2009.
To buy the same level of income in March 2013, he would have needed a pension pot of £152,800, a rise of 29 per cent.
Women have seen a 14 per cent increase in the size of pension pot needed to buy a £5,000 annuity, from £133,500 to £152,800.
Annuity rates were equalised for men and women in December 2012 following the European Court of Justice ruling in March 2011 that insurers cannot price products based on gender.
The ONS calculated the savings required to receive certain levels of retirement income based on data from its Wealth and Assets survey, and using the best annuity rates available on a single life, inflation-linked basis using quotes from the Money Advice Service.
Yellowtail Financial Planning managing director Dennis Hall says: “We are in a period of low inflation where there is a depressed value for gilts which is pushing up the costs of buying an annuity. Until we see that change, this is going to be a problem that faces all retirees.”