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9 November 2017 last updated
15-year gilt yields unchanged as investors cast doubt on inflation
15-year gilt yields chart
Based on figures for October 2017
Latest gilt yield chart

Gilt yields were lower by 1 basis point while investors cast doubt over the next rise in interest rates from US Federal Reserve as inflation data was weaker than expected.

Standard rates:  
annuity rates change 0.39%
Enhanced rates:  
annuity rates change 0.40%
Gilt yields:  
annuity rates up 1 basis point

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Annuity rates rise with higher yields

The 15-year gilt yield was lower by 1 basis point to 1.66% during the month with some volatility following lower than expected inflation data. Investors cast doubt over the US Federal Reserve expectation of an interest rate rise before the end of the year sending yields lower. Later in the month yields increased as investors expected the ECB would announce a schedule for exiting quantitative easing in 2018

Providers of standard annuities increased rates last month and only a rise of 0.39% for this month and we would expect rates to decrease by -0.49% in the short term.

For smoker and enhanced annuity providers lowered their rates by an average of -0.40% on average and rates may increase by 0.30% in the short term.

Fig 1 below shows the annuity rates changes for the whole market and the proportion that have either increased, decreased or or did not change. It also shows the range of the changes of the annuity rates over the last month:

Annuity Rates Changes
Increase No change Decrease
annuity rates decrease   30%
annuity rates no change   23%
annuity rates decrease   37%
Increases of:
up to 3.1%

  Decreases of:
up to -3.8%
  Fig 1: Annuity rate changes for the whole market

For the month of October 30% of annuity rates increased by up to 3.1% with 23% remaining unchanged and 37% decreasing by as much as -3.8%

What happened to standard rates

Below shows a fund of £100,000 with the change in standard annuity rates for single and joint pensioners from age 55 to 75 with different annuity options such as level or escalating over 1 month compared to gilt yields:

Standard annuity 1 month changes
Fig 2: Change in standard rates last month compared to gilt yields

Standard annuities increased by an average of 0.39%% during the month. The largest rise was for 50% joint life 3% escalating rates aged 55 up by 3.14% for the month. The largest decrease was for those aged 70 on a single life 3% escalating rates lower by -3.82% for the month.

What happened to enhanced rates

Lifestyle smoker and enhanced annuities have decreased significantly across the board for all types of annuities and ages.

Enhanced annuity 1 month changes
Fig 3: Change in enhanced rates last month compared to gilt yields

For enhanced and smoker the majority of rates decreased by -0.40% for the month on average. The largest fall was for those aged 60 on a single life and 3% escalation the rates reduced by -3.54%.

For the latest updates see Annuity Rates Review.

Changes to the 15-year gilt yields

The yields change for the month from 1.67% to 1.66% or 1 basis point. Fig 2 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:

15-Year Gilt Yields - October 2017
Day Rate (%) Change (bp*)
2 1.63 -4
3 1.66 +3
4 1.69 +3
5 1.71 +2
6 1.66 -5
9 1.69 +3
10 1.69 0
11 1.71 +2
12 1.70 -1
13 1.68 -2
16 1.65 -3
17 1.60 -5
18 1.64 +4
19 1.61 -3
20 1.66 +5
23 1.65 -1
24 1.68 +3
25 1.73 +5
26 1.71 -2
27 1.68 -3
30 1.67 -1
31 1.66 -1
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

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Annuity Rates
  Age Single Joint  
  55 £3,851 £3,569  
  60 £4,268 £3,973  
  65 £4,965 £4,581  
  70 £5,831 £5,274  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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