Gilt yields rise 20 basis points as Federal Reserve to raise rates

15-year gilt yields chart - Based on figures for March 2022

Annuity Rates UK - March 2022 review

The 15-year gilt yields increased 20 basis points to 1.82% as the Federal Reserve Chairman Jerome Powell has indicated rates will rise more aggressively by 0.5% increments to control inflation.

Providers have increased annuity rates for the second month in a row as the recovery continues to benefit people at retirement.

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Providers of standard annuities increased annuity rates by an average of 2.26% for this month and we would expect rates to fall by -0.26% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 2.18% and we would expect rates to fall by -0.18% 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   100%   0%   0% Increases of: max 6.2%   Decreases of: max -0.0%

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields