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Nigel Callaghan, pensions analyst of Hargreaves Lansdown, said there have been 10 cuts to annuity rates in the last month and he anticipates further annuity rate falls up to the end of 2009.

The benchmark annuity rate for a 65-year-old has dropped to less than 7 per cent this month for the first time in two years.

As a result, he warned delaying retirement could prove costly.

Mr Callaghan said: "Investors aiming to retire in the next few years may enjoy a wealthier retirement by switching now some of their pension savings out of equities and into cash. Having the good sense to bank profits is an essential part of any investment strategy."

He said pre-retirement investors had seen a stock market rally of 50 per cent, making their pension funds soar.

The average UK Equity and Managed funds have jumped 47 per cent and 31 per cent respectively since March's low point.

The risk of markets losing some ground is at least as great as there being a further upside, Mr Callaghan warned.

Pension investors considering annuitising shortly are aware that any sudden loses cannot be recovered.