Anyone planning to retire on anything more than a pittance has had an uphill battle for years. You can't rely on the government, your employer is increasingly likely to dodge the bullet. And if you take it all on yourself you're being dealt blow after blow by the markets.
Now it emerges that the bond market is moving in for a killer blow that will leave you with a 60% smaller pension. So what's happening?
Bond crisisThe problem is that bonds are linked inextricably to annuities: because annuity payments are largely funded by buying bonds. Bonds have a fixed rate of interest. When bonds get more expensive, it means you are paying more for the same return. People buying annuities therefore want bonds to be very cheap - and at the moment they are getting outlandishly expensive.
The turmoil in Europe means that investors are desperately searching for somewhere safe to put their cash. They are flowing to UK Government bonds, and because the demand is increasing the price is increasing.
These bonds therefore get more expensive and it costs more money to buy the same income: traders tend to describe this as the yield on the bonds having fallen.
Annuities crashIt means that even if you can build up a decent pension pot, you're going to get far less income from it than the same sum would have netted you 20 years ago. According to Billy Burrows of the Better Retirement Group, the return has fallen around 60% in the last 20 years.
And there's little sign of things improving in the immediate future. The fact we are living longer every year is pushing annuity returns down, as are new EU regulations which are forcing annuity companies to take even less risk with their investments.
There is every chance, therefore, that this is just another milestone on the long, steep decline in annuity returns.