Annuity Rates, Annuities, Pensions, Divorce Annuity Rates Charts
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources
   


11 January 2019 last updated

Annuity rates resist fall in yields with fear of US slowdown
Annuity rates resist fall
  Fall in gilt yields by 13 basis points is resisted by providers with annuity rates little changed
 
  More annuity topics
  First half 2019 news
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 


Annuity rates have remained steady even though 15-year gilt yields fall 13 basis points as investors leave equities fearing a US slowdown in 2019.

Global equity markets reduced by about $5 trillion in value with continued geopolitical tension between the US and China with investors seeking the safety of bonds and gilts.

Wall Street is concerned of an economic slowdown in the US in the next year with evidence of high volatility in markets, tech giants such as Apple with a drop in orders and weak growth in China suggest a possible recession in 2019-20.

Uncertainty over the Brexit vote has added to lower gilt yields which have reduced to 1.50% although providers have resisted reducing annuity rates in the short term as the following table illustrates.

  Annuity rates and gilt yields
  Jun Jul Aug Sep Oct Nov Dec
Rate £5,639 £5,633 £5,563 £5,520 £5,558 £5,563 £5,570
Yield 1.56% 1.59% 1.57% 1.71% 1.62% 1.63% 1.50%


The FTSE-100 index reached a recent low on 27 December of 6,584 following volatility on the global equity markets. Since then markets have rallied up 5.0% to 6,918 benefiting people retiring now to take their benefits as an annuity.

Action taken by President Donald Trump's partial shutdown of the government until unless his demand for $5 billion of funding from Congress has added to the uncertainty in the short-term but not affected financial markets so far.

Gilt yields and annuity rates
Fig 1: Chart comparing standard annuity rates and 15-year gilt yields


Over the year 15-year gilt yields have reduced by 25 basis points and as a general rule this would mean annuity rates would reduce by 2.5% over time. Providers have resisted this trend and rates are lower by -1.33% suggesting annuities will fall at some point if yields do not recover.

For the month of December standard pension annuities are higher by by 0.10% during the month and smoker & enhanced rates are higher by by slightly more at 0.18%.

There is greater risk for those that remain invested until they buy their annuity. The main risk is geopolitical uncertainly and the impact on the value of their pension funds.

For equities the FTSE-100 index reached a recent high last year on 8 August at 7,776 reducing 15.3% to 6,584 at the end of the year and remains below the 7,000 level. Volatility is likely to continue in 2019 including interest rate rise in the US which increases the cost of business investment and could undermined investor confidence in markets.

The Federal Reserve increased interest rates by a quarter of a percentage point to a range of 2.25% to 2.5% which is the ninth rise since 2015 based on the current strong US economy.

On Wall Street the gap between the two-year and 10-year Bond yields is very close. This occurs when short-term rates are higher than long-term rates resulting in an inversion. This has occurred before every US recession over the past 50 years.

News related stories:
Annuities could rise 1.6% as gilt yields recover on central bank plans
Pension annuity rates up over 1% with competition from providers
Annuity rates reduce as interest rate rise unlikely due to weak UK growth
UK annuities risk fall after Trump trade tariffs on Chinese imports
Related internet links:
Market Watch - Global sell off has erased $5 billion from equities
 
Annuity Rates
  Age Single Joint  
  55 £6,361 £5,898  
  60 £6,842 £6,244  
  65 £7,474 £6,843  
  70 £8,405 £7,660  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
  Annuity Rates  
Annuity Quotes
  Plan your annuity and get quotes from the 12 leading providers  
 
  free annuity quote Free Annuity Quotes
  annuity quote no obligation No Obligation
  annuity quote all providers From All Providers
 
  Annuity Quote  
  Annuity Rates News:

Annuities rise 6% to eleven year high
Annuities rise 6% to 11 year high Annuities rise 6% and gilt yields increase 90 basis points due to central bank action
Gitl yields rise 87 basis points
rise 87 basis points Gilt yields higher as investors shrug off global recession fears as base rates rise
Retirement income at record high
Retirement income soars Retirement income rises by 71.6% as yields and annuities are driven higher
Pension annuities fall on recession fears
Pension annuities fall Pension annuities fall and gilt yields are lower by -27 basis points to 2.32%
Annuity rates rise but yields weaken
Annuity rates rise 7pc last month Annuity rates rise by a record 7% for a single month but gilt yields weaken

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page
Sharingpensions.co.uk   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-22 Sharingpensions.co.uk. All Rights Reserved