Trump tariff threats on Europe about Greenland sends gilt yields higher

15-year gilt yields chart - Based on figures for January 2026

Annuity Rates UK - January 2026 review

The 15-year gilt yields reduced to 4.74% the lowest point for a year before rising +20 basis points to 4.94% by the end of the month.

US President Donald Trump's demand to acquire Greenland for security reasons was opposed by Denmark and European allies leading to the threat of 25% tariffs from 1 June 2026.

Trump said he intended to apply a 10% tariff from 1 February on all goods sent to the United States from Denmark, UK, France, Germany, Norway, Sweden, Finland and Netherlands.

Denmark's pension fund indicated it would sell US Treasuries with investors selling bonds, sending yields of all government debt higher during the month.

Gilt yields remain high as the latest US economic data for producer price index (PPI) increased from 0.1% to 0.5% per month. Higher prices for finished goods and services are passed on to consumers increasing US inflation. This makes it less likely the Federal Reserve will reduce interest rates sending yields on bonds and gilts higher.

In the UK consumer price index (CPI) released by the ONS in January 2026 increased to 3.4% suggesting the Bank of England will delay reducing base rates pressuring gilt yields to remain higher for longer.

As annuity rates are primarily based on 15-year gilt yields, the gradual rise of yields to 4.94% means providers have more opportunity to increase annuity rates going forward.

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Providers of standard annuities decreased rates by an average of -0.17% this month and we would expect rates to rise by +0.77% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers decreased their rates by an average of -0.98% and we would expect rates to rise by +1.58% in the short term if yields remain at current levels.

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   22%   16%   62% Increases of: max 1.8%   Decreases of: max 1.7%

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