Figures from Moneyfacts show the average annuity income fell by 6% in the first three months of 2020, its lowest level on record.

It means a £10,000 pension pot would now buy a 65-year-old an average annual income of £406.67 a year compared to £428.71 at the start of the year.

In addition, the impact of the coronavirus pandemic on global stock markets means the average pension fund value fell by 15.2% between January and March, its worst quarterly performance on record, surpassing the falls seen during the global financial crisis of 2008.

Only 11% of pension funds avoided losses during the first quarter of the year, according to Moneyfacts.

The combination of falling pension fund values and lower annuity rates has had a significant impact on the retirement incomes available to those saving into a personal pension and looking to annuitise.

For example, an individual who had saved £100 gross per month into a personal pension for 20 years would have built up a final pension fund of £41,388. Using this to take an income through an annuity at age 65 means they will now receive just £1,663 a year, down by 18.7% on the start of the year, and 14.4% lower than the previous all-time low in October 2016.

Richard Eagling, head of pensions at Moneyfacts, said: “Whether it is individuals saving into a pension scheme or currently in drawdown, or retirees looking for the security of an annuity, the coronavirus pandemic has had a devastating impact on potential retirement outcomes.

“The hope is that these will prove to be short-term shocks, but for those planning for retirement now and looking for a retirement income immediately, they present unenviable challenges.

“UK pension policy has increasingly moved towards placing more onus on individuals to take personal ownership of their retirement finances in recent years and take on the risks associated with this, but unfortunately recent events have shown how vulnerable they can be to major world events.”