Retirement incomes fall by £13,000 since Millennium Pension savers have been hit by a toxic combination of turmoil in the financial markets, rising longevity and falling annuity rates. Workers who don't belong to generous final salary schemes - which are dying out in the private sector - must build up a pension pot, which is used to buy an annuity or income for life at retirement. The value of their pots has been hit by falls in the stock market, while annuity rates have fallen sharply as a result of declining yields on government gilts. Alan Carey of Alexander Forbes Consultants & Actuaries said: "The Government's quantitative easing programme has adversely impacted annuity rates, which in turn has seriously hurt people's retirement income expectations. Hopefully gilt yields, which influence annuity rates, will recover to some extent when QE stops, improving annuity rates and reversing the worst of the serious deterioration over the last year. The latest figures make difficult reading for people saving for their retirement, but the news is not all bad. Pensions remain one of the most tax-efficient ways for people to make long term savings; many employers make generous contributions to DC pension savings, which is in effect additional "deferred pay" for workers and by taking advantage of workplace "salary sacrifice" people can boost their pension savings further. The real message of this year's National Pension Index is that people need to understand and take control of their own pension savings as soon as possible, as a few low cost changes made early can make all the difference to people's financial security in retirement.