Workers face months more in harness

The value of a pension fund for someone in their 50s who has paid in the equivalent of 12 per cent of pay each year, including employer's contribution, fell from 283,000 in December to 281,000 by the end of May due to the stock market fall, said the consultants Mercer.

At the same time, the rates paid on annuities, which are used to convert a pension's pot into an annual income, have fallen by around four per cent.

People could expect to receive an income of 34.20 a year for every 1,000 they had saved in a pension in December, but by the end of May this had dropped to 32.90 a year for every 1,000.

The group said the impact of the stock market volatility and falling annuity rates meant people may have to delay retirement for 15 months, to offset the falls suffered since December.