The At Retirement Report by IRESS found that as demand has fallen, the average retirement income has climbed due to increased rates and larger pension pots. An average single life annuity secured an income of £3,552 per year in June compared to £2,942 in June 2013.

The average pension pot is 13.3 per cent higher than last June, the fourth of the last five years to see a year on year increase.

In addition annuity rates have hit their highest levels since January, though major disparities do exist. The average best rate available for a standard single life was 5.73 per cent in June, compared to the average worst rate of 5.02 per cent. This amounts to a difference of £469 per year, or £9,381 over the course of a 20-year retirement.

Nigel Barlow, director of product development at annuity provider Partnership, said: “The fact that this research reveals a gap between the best and worst annuity rates of as much as 12.5% clearly highlights that taking time to speak to a financial adviser and shopping around is something that everyone should be doing.

Dave Miller, executive general manager, sourcing at IRESS, said: “Those planning to retire have seen a seismic shift since March, and the dust is far from settled. It is a step in the right direction, with rates inching up and pot sizes reaching their largest in two years.”

Barlow continued: “What is perhaps more interesting is that the average pension pot for annuitants is at its highest level in two years according to this research. This seems to suggest that those who have smaller pots may be waiting until April 2015 but those who have larger pension funds are still choosing annuities as they may have access to more flexibility already.”