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

23 July 2014 last updated
Enhanced annuities fall as Ukraine crisis sends yields to new low

Providers of enhanced annuities have reduced rates by as much as 1.6% as gilt yields react to the developing crisis in East Ukraine after the downing of Malaysian Airlines.

The 15-year gilt yields reduced to their lowest level for the year of 3.01% a fall of 10 basis points after the downing of Malaysian Airlines flight MH17.

The uncertainty over the incident and threat of sanctions against Russia for their support of the Pro-Russian Separatists has sent investors to seek safe havens such as US Treasury bonds or UK government bonds and gilts.

As a general rule a 10 basis point fall in yields will result in a 1.0% decrease in annuity rates.

Enhanced annuities have been reduced by Partnership and Liverpool Victoria by up to 1.6% and pressure is mounting on standard annuity providers.

Rates have been increased for standard annuities recently as yields reached 3.19%.

Enhanced annuities fall
  Enhanced rates are 1.6% lower as yields fall after Ukraine crisis threatens new sanctions
  More annuity topics
  Quarter 3 News 2014
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2019
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Annuity rates at risk of going lower

Enhanced annuity rates closely follow the change in yields and have already corrected the recent fall. However, standard rates increased last month by 0.56% and are now looking high.

The following chart shows the strong correlation between gilt yields and annuities since October 2013.

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

The chart shows how the yields have reduced and are now 0.30% lower than the level in October 2013 whereas annuities are 2.25% higher.

Compared to the beginning of the month yields have reduced 13 basis points although at that time rates could have improved another 0.24% so this would suggest a 1.06% reduction for annuities is possible.

For our benchmark example a person aged 65 with a fund of £100,000 could have purchased a single life, level annuity with an income of £6,143 pa. A 1.06% fall would reduce the rate to £6,078 pa or back to where they were

After falling to a low for the year of £6,037 pa in February annuity rates had been slowly recovering after reaching a recent high in November 2013 for our benchmark example of £6,196 pa.

It is likely the recent uncertainty will subside once the US and Europe clarify the extent of sanctions on Russia and if so gilt yields could recover to support the current level for standard rates and see enhanced and impaired annuity rates recover the 1.6% recent losses.

News related stories:
Pension annuities rise possible as Ukraine crisis subsides
Related internet links:
BBC - EU to widen Russia sanctions
Annuity Rates
  Age Single Joint  
  55 £3,947 £3,702  
  60 £4,391 £4,052  
  65 £5,098 £4,638  
  70 £6,055 £5,457  
£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:

Gilt yields rise with US-China trade deal
Gilt yields rise with US-China trade deal

15-year gilt yields rise 14 basis points with annuity rates up for the second month

Providers increase annuity rates by 5%
Providers increase annuity rates Standard annuities rise over 5% with gilt yields recovering from all time lows
Cash annuity offer 14% more income
Purchased life annuity better value Purchased life annuities offer 14% more income than pension annuity
Impaired annuities rise with higher yields
Impaired annuities up 1.5% Impaired annuity rates from providers rise 1.5% with prospect of Brexit deal
Gilt yields rise and Trump delays tariff
Yields recover from all time low

Yields recover from a low as Donald Trump considers limited trade deal with China

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook 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©2001-20 All Rights Reserved