Annuity rates will continue to decline as a result of the government's decision to pump more money into the economy via its quantitative easing (QE) programme, according to Saga.

Yesterday (5th July), the Bank of England's Monetary Policy Committee released a further £50 billion as part of its asset purchasing programme, adding to the £325 billion previously injected into the economy.

Saga, the over-50s campaign group, has expressed its dismay over the decision as QE has been shown to reduce annuity rates.

Dr Ros Altmann, director-general of Saga, said: "With a double dip recession, falling bank lending, large numbers of unemployed and rising borrowing costs, we must questions whether QE has had the desired effect and in fact, through its impact on annuity rates and pension funds, whether QE may have actually damaged growth."

Dr Altmann added that QE has reduced over a million pensioners' incomes through not only a reduction in annuity rates but also a fall in returns offered by drawdown products.