A decision by the European Courts in March last year, to be implemented now, means that financial firms are not allowed to treat men and women differently purely because of their sex. This affects companies offering annuities, which convert a pension pot into a monthly income. They take into account how long you are likely to live (and therefore how long they will be paying out for) when they set how much they will pay you each month.
Men will lose up to £10,000 of their retirement income because of the ruling. The change is meant to ensure that financial firms cannot discriminate between women and men. Typically women live longer than men, so they get less every month, which is meant to mean that by the time they die they will have received the same total payout. However, the end result will mean much less generous pensions for men.
Companies will have to offer women and men the same amount each month, which means that women will receive more, but to pay for this, men will receive much less. Put simply men will see their annuity payouts fall and women will see their life insurance premiums rise.
A typical example would be men with a £100,000 pension will receive £600 a year less under the new rules. Over their full retirement, this could easily add up to £10,000.
Eight out of ten annuities currently sold in the UK are bought by men, so many more people risk losing out than gaining. Women who are beneficiaries of joint life annuities purchased by their male partner will also be affected as they will end up with a lower income.
Dr Ros Altmann, director general of Saga said: "The worst affected are likely to be those with moderate amounts of pension savings, who do not have enough money to afford more flexible pension options but have saved more than the minimum £18,000 which would allow them to avoid buying an annuity... it is yet another devastating blow to people's hopes of a comfortable retirement."
Asked if there is anything more Saga can do, Dr Altmann said "There's nothing we can do to change the rules. The Association of British Insurers has been battling with Europe over the issue for years, to no avail."
Adeola Ajayi, spokesperson at the Association of British Insurers, says:"We lobbied against this ruling for nearly a decade."
This is just the latest in a long line of blows to annuity rates - which have been destroyed by rising longevity and falling returns on government bonds. In fact, according to MGM Advantage, rates have fallen 7% since June, and 20% in the past three and a half years.
So what can retirees do ?
When you retire with a defined contribution pension you will get a lump sum and in most cases you will buy an annuity to convert it into an income. Your pension company will offer you an annuity, but now more than ever, it's essential that you don't accept this first offer.
You need to shop around for the best annuity for you (which is known as taking the open market option). This could see you offered anything up to 30% more income from another annuity provider.
You don't need to do this shopping around yourself, because there are financial advisers who will do it for you, because while forces are combining to bring down your pension payout, you have to do everything within your power to push it back up again.
Report from Ian Bell