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back to annuity rates october
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Annuity Rates Chart for October 2011
Fig 1 below shows the change in annuity rates chart over the last 12 months and the rate for
October 2011: |
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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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| £6,093 pa |
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£8 / 0.1% |
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£498 / 7.5% |
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£652 / 10.5% |
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£352 / 5.4% |
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| Fig 1: Annuity rates chart of income for 12 months to October 2011 |
The annuity rates chart in fig 1 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. It shows a decrease in the annuity rates chart to £6,093 pa for October 2011, a fall of £8 pa or 0.1%. The significant falls have stopped for the moment and providers are holding their positions and only optmising their annuity rates. They optimise their rates by selecting certain markets that they know are profitable for them increasing their rates here and reducing their rates for less profitable markets elsewhere, such as annuitant ages, whether on a single or joint life basis, level or escalating. When the 15-year gilt yields are above 2.91%, for our benchmark example the providers will be developing some margin to increase the annuity rates and when gilt yields are below 2.91% there is more pressure to reduce rates.
During September the 15-year gilt yields reduced by 43 basis points and
our benchmark example also reduced by 4.3%. As a general rule a 50 basis point change in the gilt yields will result in a 5% change in the annuity rates so the providers corrected the annuity rates exactly for our benchmark example. This is not always the case and across the board the rates decreased by 3.6% in September so not all of the decrease in gilt yields were taken into account for annuity rates.
There are still risks that the annuity rates chart will show further falls as there is considerable uncertainty about the Eurozone and global economy as a whole. |
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