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


19 December 2012 last updated
Best annuity rates set for increase as 15-year gilt yields up 22 basis points

As the 15-year gilt yields continue the climb to 2.45% up 22 basis points this month it clears the way for a rise in the best annuity rates even with the changes with Unisex rates.

The 15-year gilt yields reached a low of 2.02% in August 2012 quickly followed by annuity rates falling to an all time low at that time.

Since then gilt yields have recovered and the expectation has been for annuity rates to improve with the yields, instead they have declined.

As a general rule a 22 basis point rise in gilt yields would result in a 2.2% increase in annuities for December and since August the 43 basis point rise would be a 4.3% increase.

The new Unisex rates have decreased both male and female annuities and this suggests that annuity rates are much lower than they should be with increases a possibility in the new year.

 
Gilt yields could increase annuity rates
 
  More annuity topics
  December 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
 

Annuities could increase 7% during 2013

Standard annuity rates have decreased 2.58% and smoker annuities 4.55% since August while gilt yields have increased 43 basis points which means there is scope for rates to increase. Standard rates could rise by 6.88% and smoker rates by 8.85% on this basis before gender neutral pricing is applied. As this will see increases for females only there will still be opportunities for annuities to rise.

The current low than expected annuity rates could be due to a combination of unique factors. The EU Gender Directive introducing Unisex rates has created volatility in the market as providers calculating the likely final levels for annuity rates. The difference between male and female rates has increased for some age groups with level pension annuities for those aged 70 as wide as 7.1% compared to 5% in the first quarter. For escalating rates for the same age they are 11.8% whereas during the first quarter the difference was only 6.5%.

Providers have been in a negative pricing cycle in anticipation of gender neutral pricing from 21 December 2012 and this has been exacerbated with a much higher demand for annuities from pensioners bringing forward their purchase to beat the deadline. As a result the leading providers such as Liverpool Victoria, Just Retirement, Partnership Assurance and Aviva have reduced their annuity rates to reduce the number of applications they are receiving due to the high volumes.

There are additional demand on provider resources from the Retail Distribution Review (RDR) to be introduced from January 2013 and as the year ends, providers also suffer from lower staff number with employees taking their holiday allowance which cannot be rolled over to next year further pressuring the administration system. These factors mean the best annuity rates seem unusually low and if gilt yields continue to improve could mean higher annuities during the first quarter of 2013 as providers revert to competitive strategies to meet new business targets.

News related stories:
Impaired annuity rates decreased 8% by providers to record lows
Highest annuity rates reduced 2% means lower pensioner income
Best annuity rates unlikely to increase despite gilt yields rise
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
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©2001-18 Sharingpensions.co.uk. All Rights Reserved