Four years ago a £5,000 income would have cost a man £118,000 and a woman £133,500. However, based on unisex annuity rates, today the cost is £152,800.

The report put the increase in price down to falling annuity rates.

Rates have fallen because of a combination of factors including European regulations including the gender directive – which has disallowed the use of gender to price policie- improving life expectancy, and the side-effects of quantitative easing.

The median private pension savings for a household where the head is aged 50 to 64 is £135,200. At the same annuity, this would provide an income of £4,421, the reprot said.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “Many people’s expectations of their retirement incomes will be based on historical experiences – where they exist at all, far too many are still disengaged right up to the point of retirement. However with annuity rates at an all-time low, these expectations are likely to be over-optimistic.

“There is a risk that because people haven’t saved enough they will look to maximise their income today, at the expense of inflation proofing and death benefits for their spouse tomorrow.”

Of the households that save towards a pension, 48% now have Defined Benefit pension rights, where 51% have Defined Contribution pensions.

This shows that DC provision is now overtaking DB – though the relative value is still heavily weighted in favour of DB for historical reasons.

Analysts from the Pension Policy Institute, predict that by the end of this decade, DC savers will grow to 16 million from today’s 6 million savers.

McPhail added: “It is vital that retiring DC investors shop around for the best possible terms, seeking out an enhanced annuity where they can, and considering the most appropriate shape of annuity for themselves and their dependents. If they are unsure what to do they should take independent advice.”