The annual retirement income for the average 65-year-old is now 1.7 per cent higher than a year ago.
But someone retiring this month can expect a pension income 60 per cent lower than someone who retired in May 2001, with both annuity rates and pension funds plunging in value over the past decade.
Signs of a recovery in pension incomes are timely, however, given rising household costs. Personal pension investors retiring this year are benefiting from a rally in the income paid by annuities that began last November, according to a new report from Investment Life & Pensions Moneyfacts.
The rates on annuities - which are used to convert pension savings into a regular retirement income - increased in April for the sixth successive month. The average income for a 65-year-old male buying a single-life level annuity with a 10,000 fund has gone up by 3.6 per cent from 607 a year to 629 a year since the start of 2011.
That has been marginally eclipsed by 3.7 per cent increase in the income secured by the equivalent female, the research shows.
Annuity rates have plunged by more than a quarter over the past ten years, but are now 1.4 per cent higher than in May 2010. And while the average pension fund is 0.3 per cent higher than a year ago, it has lost more than 45 per cent of its value since May 2001.
A 65-year-old male retiring this month and who paid 100 a month into a balanced managed fund over the past 20 years would now have a pension pot of 41,964, up from 41,824 if he had retired a year ago.
If he then bought a standard level annuity with the fund he would get an income of 2,639 a year, up 1.7 per cent from a year ago and the highest annual retirement income level for two and a half years.
Richard Eagling, editor of Investment Life & Pensions Moneyfacts said: "The news that annual retirement incomes have been on the increase since the turn of the year will be welcomed by personal pension savers in their struggle to obtain a comfortable retirement.
"However, much of this recent increase is due to higher annuity rates rather than surging pension fund returns, a trend that could prove little more than a temporary respite."
Low interest rates and uncertainties over inflation have kept annuity rates at historically low levels over the past three years and the current upwards trend is likely to be brief.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said: "Looking forwards, there is the possibility of rising bond yields feeding through to higher annuity rates.
"However, they will be fighting against some strong headwinds.Improving longevity, more onerous regulation, the increasing use of individual underwriting and the abolition of unisex rates will all serve to drive standard annuity rates downwards."