Annuities have been given a boost as Federal Reserve moves closer to tapering QE after unemployment falls last month which would mean lower bond prices and an increase in yields from September.

The US Fed is currently buying $85 billion of bonds and mortgage debt per month with the stimulus package until the level of unemployment reduces.

Annuity rates are primarily based on the 15-year gilt yields and tapering of US bond purchases would reduce the price and increase the yield thereby increasing income from annuities.

The stimulus has been providing liquidity fueling higher equity and bond markets creating a bubble and recent announcements by the Fed to stop Quantitative Easing (QE) from July 2014 resulted in large falls.

The Fed has subsequently reassured the markets that QE would continue until US unemployment reduced from the current 7.4% of employment to 7.0%, closer to the level in 2008 before the financial crisis.