Annuities up over 5% for November

There was another strong performance with annuity rates higher by over 5% for the month of November following investor expectation of higher inflation and a sell off of government debt pushing gilt yields higher.

Providers have greater margin and are more competitive with Canada Life, Aviva, Hodge Lifetime and Legal & General raising their rates to match Just Retirement. The 15-year gilt yields increased to their highest level since Brexit of 1.79% up 18 basis points.

Standard providers increase rates by an average of 5.76% and we would expect in the medium term of six months rates may increase further by 0.12%.

For smoker and enhanced annuity providers increased their rates by an average of 4.78% on average and in the medium term of six months rates may increase by 2.09%.

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: up to 8.3%   Decreases of: up to 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