Thousands of people nearing retirement are unwittingly realising stock-market losses and moving into bonds — the yields on which fell to a 30-year low last week as interest rates tumbled.

Research seen exclusively by The Sunday Times shows that moving from high-risk investments to low-risk bonds and cash in the years before retirement has resulted in a poor outcome in two-thirds of cases in the past three decades.

Many pension savers opt to do this when they take out their plan, and fund managers will start the process from age 60 without notifying them.

However, the FTSE 100 has plummeted 38% in the past year, and yields on benchmark 10-year gilts fell to less than 3.4% last week — the lowest since records began 30 years ago. Savers may be better off staying in equities to benefit from any upswing and avoid locking into such low yields.

Adrian Waddingham at actuary Barnett Waddingham said: “The unprecedented fall in rates is part of a triple whammy for pension savings — the ‘perfect storm’ of falling stock-market values, increasing longevity and now very low interest rates.”

Hargreaves Lansdown, an adviser, estimates that up to 1m pension savers have plumped for “lifestyling”— the automatic process whereby 20% of a pension pot moves out of equities and into bonds and cash each year from age 60 to 65.

However, its research, which examines five-year periods from November 1978 to November this year, shows that a balanced managed pension fund (typically made up of 80% equities and 20% fixed interest) would have outperformed 70% of the time.

In these periods, the approach gave an average pension pot of £25,369 more than a lifestyling strategy, based on a fund worth £100,000 five years before retirement. In the rare instances when lifestyling outperformed, it did so by only £15,501.

The worst period for lifestyling was in 2000-05, which included the bear market of 2000-03. Lifestyling returned only £2,788 on a £100,000 pot, £6,030 less than the balanced managed fund. Conversely, it delivered superior performance in 2003-8, when markets rallied for the first four years — £16,301 more than a balanced fund.

“While it’s prudent to move to lower-risk assets as you near retirement, doing this blindly often comes at a high cost,” said Laith Khalaf at Hargreaves Lansdown.

“If your lifestyling plan has just come to an end you will have cushioned yourself, but those lifestyling now could end up thousands of pounds worse off.”

People about to retire and exiting pensioners are also being hit: annuity and savings rates are dropping. Norwich Union, Prudential and Canada Life cut annuity rates by 1.5% to 3.5% last week.

The torrid time could see an increasing number of retirement savers buy an annuity before rates fall further — then defer taking their state pension. For every five weeks you defer, the government increases your entitlement by 1% — equivalent to an annual return of 10.4%. Typically, if you live for nine years after you start taking benefits, you will be better off.

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