Drastic cuts in interest rates and the Bank’s policy of printing new money have delivered a triple blow to pensioners. Their income from savings has been sharply reduced, inflation is eating away at their capital and annuity rates, which determine the income from private pension pots, have fallen significantly.

Ros Altmann, the respected economist who is director general of Saga and a governor of the London School of Economics, estimated that recently retired pensioners were receiving £4,245 a year less than if they had retired just before the credit crisis. This amounted to a cut of 40pc.

Assuming that pensioners had £50,000 in savings and received interest at Bank Rate, their income from these savings would now be just £250 a year, compared with £2,875 in 2007 – a fall of £2,625 or 91pc – as a result of the Bank of England cutting Bank Rate from 5.75pc to 0.5pc.

Annuity incomes have fallen by about 21pc since 2007, Ms Altmann said. At that time a £100,000 pension pot would typically produce an income of £7,600 a year; now the same sum would yield only £5,980, fall of £1,620.

The combined loss of income is £4,245. While interest rates are bound to rise in future, reversing the loss of income from savings, buying a conventional annuity locks you into that income for life. 

Much of the fall in annuity rates can be attributed to the Bank of England’s programme of buying gilts – British government bonds – with newly created money, a process called “quantitative easing” (QE). The Bank’s purchase of large amounts of these bonds pushed the price up, so depressing yields. Gilt yields largely determine annuity rates. The Bank recently decided to embark on a second round of QE.

The third blow to pensioners’ finances came from inflation. While prices for the population as a whole have risen by 13.9pc since 2007, according to the Centre for Economics & Business Research, pensioners have suffered cumulative inflation of 19pc, according to Saga’s figures.

Therefore, since 2007 the purchasing power of £50,000 of savings has fallen to just £40,500 now, using the pensioners’ inflation measure.

When the Bank launched its first round of QE in 2009, many economists warned that it was bound to stoke inflation and depress annuity rates. Ms Altmann told The Sunday Telegraph in January of that year: “The Bank of England’s actions will sow the seeds for inevitable inflation down the line.

“The Government’s policy of using taxpayers’ money to bail out those who have over-borrowed will spell disaster for people with pensions and long-term savings. It is easier to punish savers than let debtors get into further difficulties.”

This week she said: “All of these things have, sadly, proved to be correct and, even more sadly, the Bank of England is still pursuing the same policies and making the same mistakes. Only this time it is much harder for savers to protect themselves against inflation.”

Ms Altmann pointed out that National Savings & Investments had withdrawn its tax-free inflation-linked bonds and that interest rates were less than inflation even on the best-paying accounts.

“Investors and savers either have to take much more risk or keep suffering losses in the value of their capital,” she said.

“Pensioners on fixed annuities are having a torrid time. Anyone coming up to retirement now will be hit by the drop in annuity rates – QE directly depresses annuity values, so everyone buying an annuity will have less income for the rest of their life due to this current policy.

“Even though the Bank of England may consider QE a temporary necessity, its effect will be permanent for anyone retiring and taking their annuity now.

“The authorities are simply repeating more of the same medicine, which did not cure the patient and has had terrible side-effects on savers and pensioners.”

Billy Mackay of AJ Bell, the Sipp specialist, said: “The need to stimulate the economy is only too clear but an unfortunate side-effect of quantitative easing is that it will result in another cut in pensioners’ income at a time when they can ill afford it.

“This comes as a real blow because gilt yields were already at record lows before this £75bn stimulus package was announced. It’s entirely feasible that this will lead to further falls and heartache for people considering buying an annuity.”