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7 June 2019 last updated

Pension annuities fall as investors seek safety of bonds and gilts

Pension annuities fall
Standard rates:  
annuity rates change 1.05%
Enhanced rates:  
annuity rates change 0.78%
Gilt yields:  
annuity rates change 28 basis point
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15-year gilt yields chart - Based on figures for May 2019
Latest gilt yield chart

May 2019 Review

In the UK annuity rates have decreased -1.05% for the month as gilt yields fall 28 basis points. Uncertainty with Brexit together with the US-China trade deal as both sides threaten higher tariffs has seen rising demand for treasury notes, gilts and bonds sending yields lower.

The 15-year gilt yield decreased by 28 basis points to 1.21% during May 2019 is the lowest point reached since September 2016 with providers of standard annuities decreasing rates by an average -1.05% for this month and we would expect rates to fall by -1.75% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have decreased their rates by an average of -0.78% and rates may fall by -2.02% in the short term if yields do not fall.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes
Increase No change Decrease
annuity rates decrease   2%
annuity rates no change   2%
annuity rates decrease   96%
Increases of:
max 0.2%


Decreases of:
max -2.0%

  Fig 1: Annuity rate changes for the whole market

For the month 2% of annuity rates increased by up to 0.2% with 2% remaining unchanged and 96% decreasing by up to -2.0%.

What happened to standard rates

Below shows a fund of £100,000 with the change in standard annuity rates for single and joint pensioners from age 55 to 75 with different annuity options such as level or escalating over 1 month compared to gilt yields:

Standard annuity 1 month changes
Fig 2: Change in standard rates last month compared to gilt yields

What happened to enhanced rates

Lifestyle smoker and enhanced annuities have decreased significantly across the board for all types of annuities and ages.

Enhanced annuity 1 month changes
Fig 3: Change in enhanced rates last month compared to gilt yields

For the latest updates see Annuity Rates Review.

Changes to the 15-year gilt yields

The yields change for the month from 1.49% to 1.21% or 28 basis point. Fig 2 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:

15-Year Gilt Yields - May 2019
Day Rate (%) Change (bp*)
1 1.46 -3
2 1.49 +3
3 1.52 +3
7 1.46 -6
8 1.44 -2
9 1.44 0
10 1.45 +1
13 1.42 -3
14 1.42 0
15 1.38 -4
16 1.39 +1
17 1.36 -3
20 1.38 +2
21 1.40 +2
22 1.33 -7
23 1.28 -5
24 1.28 0
27 1.28 0
28 1.25 -3
29 1.23 -2
30 1.23 0
31 1.21 -2
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
UK enhanced annuities rise with stronger data from China and eurozone
Enhanced annuity rates down over 3% as investors seek safe havens
Annuities fall with lower gilt yields after Brexit uncertainty
UK annuities could rise as investors leave safe havens
Gilt yields rise as Trump delays tariff on $200bn China trade
Annuity Rates
  Age Single Joint  
  55 £3,947 £3,702  
  60 £4,391 £4,052  
  65 £5,098 £4,638  
  70 £6,055 £5,457  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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