Annuity Rates, Annuities, Pensions, Divorce
Equity release lifetime mortgages
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources

20 November 2012 last updated
Best annuity rates unlikely to increase despite gilt yields rise

The 15-year gilt yields have increased 13 basis points in the last few days giving providers the chance to increase the best annuity rates on the market but this is unlikely with Unisex rate changes.

Providers have been reducing annuity rates this month and the recant increase in the 15-year gilt yields are unlikely to change the direction. Yields have increased to 2.31% and this gives providers more scope to improve annuity income for pensioners.

Since April this year UK annuities have been reducing and more rapidly as the UK Gender Directive date of 21 December approaches which will mean male and female rates will be the same.

Gilt yields have increased since they reach a low of 2.02% in August to 2.32% today and as a general rule a 30 basis point rise would mean a 3% rise in annuity rates. Annuities are actually lower by about 3% which suggests providers are in a downward pricing cycle.

Gilt yields rise but annuities remain level
  More annuity topics
  November News 2012
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2019
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Gender Directive already discounted in annuity rates

During normal pricing periods competition would mean pensioners would receive the best possible offers from providers and annuity rates would closely follow the 15-year gilt yields. With the EU Gender Directive both male and female annuities must be the same and this has resulted in volatility in the market.

As providers do not know exactly where rates will be for the different ages, features of pension annuities for different fund values offered by competitors the general strategy is to take account of this unknown risk by reducing annuity rates now to create more margin for the underwriters. This potential over correction will allow providers to refine their offers and target the more profitable markets based on newly calculated figures for a combined unsex annuity rate formula.

In the short term pensioners retiring now will receive poor value from their UK annuities as some of the EU Gender Directive is already being factored before the introduction of unisex annuity rates. For example, the annuity rates when compared to gilt yields over the past six months will usually show some time periods where annuities are over priced and some under priced due to competition.

This changed from September and now the best annuity rates are under priced with the expectation of increases possible of 2-3% over one month, 6% over three months and 8-9% over 5 months. If gilt yields remain at current levels if is possible that annuity rates will increase in the first quarter of 2013.

News related stories:
Impaired annuity providers reduce rates 2% before EU Gender Directive
Annuity rates likely to lower as Bank of England gives QE hint
Impaired annuity rates have been reduced up to 2% as gilt yields fall
UK annuity rates may lower as QE expected after falling inflation
Unisex annuity rates to reduce annuities for males and couples
Call 020 8816 7501 for a quote
Annuity Rates
  Age Single Joint  
  55 £4,433 £4,127  
  60 £4,914 £4,660  
  65 £5,563 £5,094  
  70 £6,272 £5,976  
£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:

Retirement income down 14%
Retirement income down Brexit turmoil and equity volatility sends investors to the safety of gilts and bonds
Drawdown numbers hit record high
Pension drawdown withdrawals hit record high

Data from HMRC shows a record 5.9bn accessed in 2018 using drawdown

Annuity income hit by volatility
Annuity income hit by volatility Fall in equity markets and gilt yields make buying an annuity more difficult
Annuities fall with US tariffs uncertainty
Pension annuities fall with US tariffs Pension annuities fall as tension remains high over economic impact of US tariffs

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook and Google+
  Facebook Page Twitter Page Twitter Page   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-18 All Rights Reserved