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8 September 2017 last updated
15-year gilt yields fall as investors seek safe havens over North Korea
15-year gilt yields chart
Based on figures for August 2017
Latest gilt yield chart

15-year gilt yields fall 18 basis points as investors seek safe havens such as government bonds and gilts following uncertainty over the US and North Korea conflict.

Standard rates:  
annuity rates up 1.73%
Enhanced rates:  
annuity rates up 1.59%
Gilt yields:  
annuity rates up 18 basis point

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Annuity rates rise with higher yields

The 15-year gilt yields decreased by 18 basis points to 1.41% during the month as investors seek safe havens such as bonds and gilts following increasing geopolitical tension. The conflict between the US and North Korea over missile tests has been ongoing during 2017 and increasing intensity will see a fall in the 15-year gilt yields, sending annuity rates lower.

Unusually providers have increased rates by an average of 1.73% and we would expect rates decrease by -3.53% in the short term.

For smoker and enhanced annuity providers increased their rates by an average of 1.59% on average and rates may decrease by -3.39% 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   86%
annuity rates no change   14%
annuity rates decrease   0%
Increases of:
up to 4.5%

  Decreases of:
up to 0.0%
  Fig 1: Annuity rate changes for the whole market

For the month of September 100% of annuity rates increased by up to 4.5% with 14% remaining unchanged and only 0% decreasing.

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 increase by an average of 1.73% during the month. All age groups increased and in particular those aged 55 to 65 for all annuity basis with increases of up to 3.9%.

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 providers increased rates across the board with an average rise of 1.59%. There was a strong rise for those aged 55 to 60 with increases up to 4.5%. Only those aged 75 on a single life basis had no change for the month.

For the latest updates see Annuity Rates Review.

Changes to the 15-year gilt yields

The yields change for the month from 1.59% to 1.41% or 18 basis points. 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 - August 2017
Day Rate (%) Change (bp*)
1 1.56 -3
2 1.59 +3
3 1.51 -8
4 1.53 +2
7 1.50 -4
8 1.51 +1
9 1.47 -3
10 1.44 -3
11 1.43 -1
14 1.44 +1
15 1.45 +1
16 1.48 +3
17 1.47 -1
18 1.47 0
21 1.44 -3
22 1.46 +2
23 1.44 -2
24 1.45 +1
25 1.43 -2
28 1.43 0
29 1.38 -5
30 1.41 +3
31 1.41 0
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Latest annuity rates could fall as US and North Korea uncertainty grows
Enhanced annuities increase 4% as Just leads market with higher rates
UK annuity rates likely to fall as Bank of England cuts growth prospects
Pension annuities set to rise as central banks signal end to cheap money
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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