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back to annuity rates january
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Annuity Rates Chart for January 2012
Fig 1 below shows the change in annuity rates chart over the last 12 months and the rate for
January 2012: |
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| Annuity Rates Chart for £100,000, male, age 65, single, level |
| Latest rate: |
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1 month change: |
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3 month change: |
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6 month change: |
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1 year change: |
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| £6,009 pa |
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£6 / 0.1% |
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£84 / 1.3% |
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£582 / 8.8% |
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£581 / 8.8% |
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| Fig 1: Annuity rates chart of income for 12 months to January 2012 |
In fig 1 the annuity rates chart is our benchmark example with £100,000 to purchase an annuity for a 65 year old male on a single life, level and no guaranteed period.
For January 2012 it shows that our benchmark annuity rates chart has increased slightly right at the end of the December by £43 pa or 0.7% and dropped slightly to £6,009 pa at the end of January. During December the 15-year gilt yields reduced by 24 basis point and reduced by 44 basis points over two months, however, on average the standard annuity rates increased by 1.08% and smoker annuity rates decreased by only 1.07% in December. The standard rates have been increased due to Legal & General and Canada Life improving their rates and the smoker annuity rates have decreased due to Liverpool Victoria and Just Retirement reducing their rates.
As a general rule a 24 basis point change in the gilt yields will result in a 2.40% change in the annuity rates so this would suggest that based on one month the standard annuity rates will reduce by 3.48%. Over two months the standard annuity rates reduced by 1.19% so over two months they will decrease by 3.21% giving a range of approximately 3.2% to 3.5% decrease if gilt yields do not increase. For smoker annuity rates they have decreased by 3.2% in the last two months suggesting that over one month smoker rates will decrease by 1.33% and over two months they will decrease by 1.2% giving a range of 1.2% to 1.33% decrease if gilt yields do not increase.
Equity markets have been positive over December and the start of January 2012, however, there are some difficult issues ahead for the first quarter of 2012 with the Eurozone debt crisis to resolve, the falling euro and Quantitative Easing which could result in lower gilt yields and lower annuity rates.
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