Retired household income is being boosted by savings and investment income by up to £10.3 billion a year which is worth around £1,445 to the average household, according to latest analysis from MetLife.

The average retired household makes the money from interest on cash savings and returns on equity-based savings. But the current historically low interest rates and stock market volatility means the contribution of income from savings and investments to retired household’s finances is still below the 2008 peak

Before interest rates were cut to 0.5% in March 2009 investment income was worth more than £12.375 billion – the equivalent of £1,863 per household – to pensioners.

The fall in investment savings contrasts with the rise in total pensioner income; government data shows median retired household incomes at £21,100 are now £1,800 higher in real terms than at the depths of the recession in 2007/08. Analysis shows investment and savings income currently accounts for around 6.8% on average for retired households compared with 10.3% in 2007/08. However for wealthier households investment income contributes nearly 22% of total income and is worth around £8,200 annually.

MetLife’s Guaranteed ISA aims to address savers’ concerns on low rates and volatility with its unique daily lock-ins and a choice of income or capital guarantees.

Dominic Grinstead, managing director of MetLife UK, said: “Investment income can make a major contribution to boosting standards of living in retirement and the £10.3 billion earned a year is substantial.

“But historically low interest rates and continuing volatility has squeezed investment income for retired households highlighting the need for alternative solutions which can help boost pensioner finances.

“ISAs have a major role to play in planning for retirement and there is a need for innovation to provide more certainty and flexibility over income and capital which is where guaranteed solutions can play a major role.”