The BoE cut base rates from 5.25% to 5% on August 1 and markets expect up to two more cuts this year. That’s dire news for savers but there is an alternative.

As interest rates fall the returns on both variable rate easy access savings accounts and fixed-rate savings bonds will inevitably follow suit.

The process has already begun. One year ago, United Trust Bank's five-year fixed rate savings bond paid 5.80% a year. Today, the same product pays just 4.25%.

That's a huge drop and there's more to come as rates are set to fall across the market.

Yields on corporate and government bonds, another low-risk source of income, are also in retreat. Two-year UK gilts yielded almost 5.2% this time last year. Today, they yield just 3.6% and are likely to fall further.

With annuity rates likely to follow a similar trajectory, pensioners will have to work harder to generate the income they need in retirement.

One form of income is rising rather than falling but it involves taking on greater investment risk.

It's possible to get up to 7% or 8% a year by investing in dividend-paying UK shares.

Dividends are regular payments that companies make to reward shareholders for holding their stock.

Blue-chips listed on the FTSE 100 offer some of the most generous dividends in the world, plus potential share price growth on top.

Index-tracking exchange traded fund (ETF) iShares core FTSE 100 UCITS ETF yields 3.79% a year, minus a modest annual charge of 0.07%.

It offers the prospect of capital growth, too, if share prices rise. Over the last year, the FTSE 100 is up 14.44%. That gives a total one-year return of 18.23% before charges.

The popular City & London Investment Trust yields 3.61%, minus an annual charge of 0.3%. It's up 19.6% over 12 months, giving a total return of 23.21% before charges.

Some so-called equity income funds pay more income. For example, the Santander Equity Income Trust yields 4.25% minus a 0.54% charge. Fidelity Enhanced Income yields 6.85%, with a 0.75% charge.

Obviously, buying shares isn't for everyone, as your capital is at risk. Older people should be particularly wary as they have less time to recoup losses.

Investors who are happy with that could buy individual company stocks and get even more income, but with more volatility.

At time of writing, FTSE 100-listed bank HSBC Holdings was yielding 7.31% a year while insurer Legal & General Group yielded a bumper 8.89%.

Most companies try to increase their dividends every year, allowing investors to share in their success.

Last Thursday, for example, insurer Admiral boosted its payout by 39% after a strong set of results. While Admiral's yield looks low at 2.61% it’s forecast to hit 4.8% next year and may climb much higher over time.

On Wednesday, insurer Aviva hiked its dividend by 7% as profits surged.

As savings rates fall, many dividends are rising.

Dividends aren’t guaranteed and can be cut at anytime. Telecoms group Vodafone, for example, currently yields more than 10% but will slash shareholder payouts in half next year.

Individual stocks are volatile and most people will be better off spreading their risk across dozens of companies with a fund.

Whether saving in a stocks and shares Isa or pension, build a balanced portfolio that includes shares, cash, bonds, property and gold.

Rachael Griffin, tax and financial planning expert at Quilter, said you now pay tax on dividend income once it exceeds just £500 a year, assuming you exceed your £12,570 personal allowance.

"Your £20,000 Isa allowance allows you to invest in dividend stocks without worrying about income tax, capital gains tax, or dividend tax on your returns.”

That means investors can get their 7% or 8% yields without paying a penny in tax on the money.