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9 August 2021 last updated

Gilt yields fall as investors seek safe havens with spread of Delta variant

Yields fall 2pc with spread of US coronavirus
Standard rates:  
annuity rates change 1.47%
Enhanced rates:  
annuity rates change 0.82%
Gilt yields:  
annuity rates change 21 basis point
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15-year gilt yields chart - Based on figures for July 2021
Latest gilt yield chart

Annuity Rates UK - July 2021 review

The 15-year gilt yields have reduced 21 basis points to 0.86% following the rapid spread of the Delta variant coronavirus in the US and fear this could impact an economic recovery.

In uncertain times investors seek the safety of government security such as Treasury notes, German bunds of UK gilts sending the price higher and yields lower.

As annuity rates are mainly based on the 15-year gilt yields, providers have reduced annuity rates across the board at least in the short term.

Find related news here:
Gilt yields rise as GDP figures show US economy first quarter recovery
Pension annuities rise 3.2pc as investors sell gilts and bonds

Providers of standard annuities reduced annuity rates by an average of -1.47% for this month and we would expect rates to fall by -0.63% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have reduced their rates by an average of -0.82% and rates and we would expect rates to fall by -1.28% 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   4%
annuity rates no change   14%
annuity rates decrease   81%
Increases of:
max 0.7%


Decreases of:
max -3.3%

  Fig 1: Annuity rate changes for the whole market

For the month 4% of annuity rates increased by up to 0.7% with 14% remaining unchanged and 81% decreasing by as much as to -3.3%.

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 1.07% to 0.86% or 21 basis point. Table 1 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:

15-Year Gilt Yields - July 2021
Day Rate (%) Change (bp*)
1 1.08 -1
2 1.05 -3
5 1.06 +1
6 0.98 -8
7 0.94 -4
8 0.95 +1
9 1.00 +5
12 0.98 -2
13 0.96 -2
14 0.94 -2
15 0.98 +4
16 0.94 -4
19 0.86 -8
20 0.85 -1
21 0.91 +5
22 0.86 -5
23 0.87 +1
26 0.86 -1
27 0.84 -2
28 0.87 +3
29 0.87 0
30 0.86 -1
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Retirement income recovers 30pc as UK eases lockdown measures
Enhanced annuity rates up over 6pc as providers adjust for higher yields
Gilt yields rise record amount of 60 basis points on inflation fears
Annuity Rates
  Age Single Joint  
  55 £5,736 £5,481  
  60 £6,132 £5,880  
  65 £6,860 £6,462  
  70 £7,678 £7,215  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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