More than £3,000 has been wiped off the value of pension pots in the past four years, according to a new report by Prudential insurance.

The survey found that individuals retiring this year can expect to receive an average retirement income of £15,500 - £3,100 less than those who retired in 2008.

Experts have attributed the fall to the recent chaos on the stock market and shrinking annuity rates, which dropped by 8% in 2011.

Vince Smith-Hughes of the Prudential said: ‘The current economic climate has created the perfect storm for people in the run-up to retirement.

‘The impact of the credit crunch, banking crisis, recession, and concerns over the eurozone, has been reflected in the fact that expected retirement income levels have hit a five-year-low.’

It is thought that one in five pensioners expect to live on £10,000 a year or less. This figure includes the state pension and income from private and company pension schemes.

Ros Altmann, director general of over-50s group Saga, said: ‘This latest report shows the terrible and permanent damage this temporary boost to the economy has done to pensioners.

'Savers retiring today are being locked into a lower pension for life because of the drop in annuity rates’.

Plans to cut red tape and introduce tax breaks for employee-owned companies have been unveiled by the Deputy Prime Minister Nick Clegg.

Addressing the city earlier this week, Clegg urged firms to offer shares to their employees in a bid to boost productivity and ‘unlock growth’.

The Government hopes the plans will create a so-called ‘John Lewis economy’ and encourage ‘responsible capitalism’.

One proposal under consideration is a ‘right to request’ rule, which would give staff an automatic opportunity to ask their employer for shares.

The Chief Secretary to the Treasury, Danny Alexander, is also thought to be ‘[looking] at the tax arrangements for employee-owned firms’.

At an event hosted by the City of London Corporation and Centre Forum think tank, the Deputy PM said: ‘We don't believe our problem is too much capitalism - we think it's that too few people have capital.

‘We need more individuals to have a real stake in their firms. More of a John Lewis economy, if you like. And what many people don't realise about employee ownership is that it is a hugely underused tool in unlocking growth.’

He added: ‘Firms that have engaged employees, who own a chunk of their company, are just as dynamic, just as savvy, as their competitors. In fact, they often perform better. Lower absenteeism. Less staff turnover. Lower production costs. In general, higher productivity and higher wages. They weathered the economic downturn better than other companies.’