They would have to live until the age of 90 before their annuity became ‘good value’, former Downing Street pensions adviser Dr Ros Altmann warned last night, according to the Daily Mail.

In a stark wake-up call, she said that the millions of pensioners forced to turn their nest eggs into a retirement income were undertaking a ‘high risk’ enterprise that could cost them most of their hard-earned cash.

Annuity rates, which determine how much a pension pays, are at an all-time low.

This is down to a combination of low interest rates, rising life expectancy and the Government’s policy of printing money through quantitative easing.

She said most pensioners, who have little option but to buy an annuity if they want a guaranteed income in retirement, will lose much of their nest egg if they die young, become ill or if inflation rises.

Dr Altmann, the former pensions adviser to Tony Blair, warned that pensioners who buy annuities at 65 will not get their money back unless they live until the age of 82, and would have to reach 90 before their annuities became ‘good value’.

She demanded greater transparency from the pensions industry so that customers can compare products more easily and are fully aware of the risks.

She told the Daily Mail: ‘Far from being a low-risk purchase, buying an annuity could be the biggest gamble you ever take in your life.

An annuity purchase is a long-term investment decision, which risks losing much or all your money, yet people are given no risk warnings about the dangers of buying.

‘If you buy a financial product that can lose more than three quarters of your money, it would usually be considered “high risk” – and those selling it to you would surely have to give you a proper risk warning.’