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12 December 2019 last updated

Providers increase annuity rates over 5pc as yields recover from all time lows

Providers increase annuity rates
Standard rates:  
annuity rates change 5.14%
Enhanced rates:  
annuity rates change 1.72%
Gilt yields:  
annuity rates change 7 basis point
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15-year gilt yields chart - Based on figures for November 2019
Latest gilt yield chart

November 2019 Review

Standard annuities are up by 5.14% for November as the 15-year gilt yields continue to recover with more optimism for the US-China limited trade deal being ratified before the end of the year.

Investors expect the Conservative Party to have a majority although it is uncertain if this would be sufficient to successfully negotiate a Brexit agreement with the EU.

The 15-year gilt yield are higher by 7 basis points to 0.93% during November 2019 with providers of standard annuities increasing annuity rates significantly by an average 5.14% for this month and we would expect rates to reduce by -2.46% in the medium term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 1.72% and rates and we would expect rates to increase 0.65% in the medium 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   95%
annuity rates no change   3%
annuity rates decrease   2%
Increases of:
max 9.8%


Decreases of:
max -0.6%

  Fig 1: Annuity rate changes for the whole market

For the month 95% of annuity rates increased by up to 9.8% with 3% remaining unchanged and 2% decreasing by up to -0.6%.

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 0.86% to 0.93% or 7 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 - November 2019
Day Rate (%) Change (bp*)
1 0.88 +2
4 0.94 +6
5 1.01 +5
6 0.95 -6
7 1.03 +8
8 1.04 +1
11 1.04 0
12 1.04 0
13 1.00 -4
14 0.95 -5
15 0.98 +3
18 1.00 +2
19 0.99 -1
20 0.99 0
21 1.02 +3
22 0.97 -5
25 0.96 -1
26 0.91 -5
27 0.93 +2
28 0.93 0
29 0.93 0
  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 £3,851 £3,569  
  60 £4,268 £3,973  
  65 £4,965 £4,581  
  70 £5,831 £5,274  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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