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


7 June 2018 last updated

Pension annuity rates up over 1% with competition from providers

Pension annuity income is up over 1% as providers are more competitive even though political turmoil in Italy during the month sent gilt yields significantly lower.

Providers have ignored the 31 basis point fall in the 15-year gilt yields at the end of May and maintained the momentum built up during the month with sustained competition from Aviva, Canada Life, Legal & General and Just.

Gilt yields increased to 1.81% during May and collapsed following Italy's political turmoil as investors sold Italian bonds in faviour of safe havens such as US Treasury, German Bunds and UK gilts.

Despite yields reducing to 1.50% the providers increased standard rates ending up 1.36% and enhanced annuities up 1.09%.

Strong gains were made for single life, 3% escalating annuities rising by up to 6.8% for standard rates and up to 5.4% for smoker and enhanced rates.

About two thirds of annuities increased during the month of May and one third decreased but only by -0.5% on average.

 
Pension annuity rates up 1%
  More competition from providers has increased rates 1% even though gilt yields tumble
  More annuity topics
  Quarter 2 News 2018
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2023
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 

Gilt yields recover after Italian turmoil

The Italian political turmoil was short lived and investors satisfied with the solution reached by the coalition government avoiding a full blown crisis. The 15-year gilt yields have already recovered 15 basis points this month releasing pressure for the providers to take action reducing rates.

  Standard annuity rates and gilt yields
  Dec Jan Feb Mar Apr May Jun
Rate £5,476 £5,546 £5,645 £5,626 £5,613 £5,639 £5,639
Yield 1.50% 1.75% 1.75% 1.58% 1.67% 1.53% 1.68%


The above table compares the change in annuity rates and 15-year gilt yields since December 2017. Providers have maintained rates and for for our benchmark example of a 65 year old with a £100,000 fund buying a single life, level income rates are 2.97% higher.

In terms of the £163 pa rise in lifetime income, the Office of National Statistics (ONS) would expect a male to live for 17.3 years and he will have £2,820 more over his lifetime. For a female she can expected to live for 20.4 years increasing her lifetime income by £3,325.

Over the year annuity rates have increased £367 pa from £5,272 pa in May 2017 and since reaching the all time low in August 2016 of £4,696 pa, rates are 20.0% or £943 pa higher.

This is a considerable recovery exceeding that of the recovery in yields. Gilt yields reduced to an all time low 0.90% during August 2016 following the Brexit vote and have since recovered to 1.68%, up 78 basis points suggesting annuities would increase by only 7.8%.

Over the long term of 10 years our benchmark example has reduced from £7,908 pa in JUly 2008 to £5,639 pa today down -28.7%. This compares to gilt yields lower by -33.0% suggesting that over the long term gilt yields and annuities are more closely matched.

For annuities the providers may be more buoyant with the recover in yields as they return to their previous upward direction.

News related stories:
Gilt yields fall with Italy political turmoil and could hit annuity rates
Annuity rates reduce as interest rate rise unlikely due to weak UK growth
UK annuities risk fall after Trump trade tariffs on Chinese imports
Pension annuity rates surge almost 4% by providers with higher yields
Related internet links:
Guardian - Italy at risk of financial crisis
 
Annuity Rates
  Age Single Joint  
  55 £5,995 £5,799  
  60 £6,379 £6,136  
  65 £7,385 £6,807  
  70 £8,335 £7,677  
£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:

15-year gilt yields soar to record 5%
Gilt yields soar to record 5% Investors expect higher interest rates for longer with gilt yields soaring to 5%
Pension annuities fall with lower yields
Pension Annuities fall Rising annuity rates up 12% in the last two months ends due to lower inflation
Annuities at risk due to falling inflation
Annuity rates at risk as inflation falls Surprise fall in inflation sends gilt yields -52 basis points lower threat to annuities
Yields higher as interest rates to rise
Annuities up as gilt yields rise Standard annuities rise +3% as central banks expected to raise interest rates
Gilt yields up 44 basis points
Gilt yields up 44 basis points Gilt yields increase 44 basis points as central banks are expected to raise base rates

  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©2001-23 Sharingpensions.co.uk. All Rights Reserved