Just Retirement will also reduce payments for some customers.
Standard Life has written to advisers explaining that the fall in RPI to minus 0.4 per cent, announced in April, would result in a reduction in some clients’ annuity payments.
If the RPI is negative on the client’s annual review date, they will receive the lower amount for all of the following year.
Norwich Union, Legal & General, LV=, Partnership and Axa have not reduced the income for inflation-linked annuitants.
Less than 10 per cent of annuities are inflation-linked. Some people opt for a floor option, which means they will not be affected by deflation.
Standard Life says it has 6,000 pensioners with an RPI-linked annuity without a floor while Prudential says it has 9,000 clients in this position.
Hargreaves Lansdown pensions analyst Nigel Callaghan says: “Despite the latest inflation figures, pensioner inflation is running at around 5 per cent. Some investors who bought RPI linked annuities are now seeing their income shrink. It is great Axa and LV= have had a change of heart and decided to make sure that their RPI linked annuities do not actually go down.”
But he says inflation remains a major issue for pensioners.
He says: “Inflation remains a significant threat to pensioners in the medium term and those about to retire should still give serious thought to how to protect against the erosion of their purchasing power in retirement.”