Insiders at some of Britain’s most powerful firms, actuaries and leading academics have helped the Daily Mail piece together where every penny of savers’ nest eggs go.

The investigation found how insurers are employing extreme caution to keep their profits high and payout rates at rock bottom levels.

Based on insurers’ own predictions, they claim to make £6,500 profit from every £100,000 of savings. But this assumes savers always pick the very best deal and live until they are 90.

In reality, on average someone turning 65 this year will die when they are 84 – and the vast majority will not get the best payout possible.

This means some insurance companies could pocket up to £29,000 from the average saver.

It highlights why it is vital savers shop around for the best pension income.

Alan Higham, director of adviser Annuity Direct, said: “Where your pension money goes when you retire is a secretive business. Even for people in the industry it can be hard to find out.

“There is so little competition that I would not be surprised to find monopolistic behaviour occurring. Judging by today’s rates, a big percentage of a saver’s funds is likely to disappear into a black hole over the coming decades.”