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12 November 2018 last updated
Yields fall as Brexit uncertainty sends investors to safe havens
15-year gilt yields chart
Based on figures for November 2018
Latest gilt yield chart
 

Gilt yield recovery hit by Brexit uncertainty with investors heading for the safety of gilts and bonds as government's EU deal lacks support from parliament.

Standard rates:  
annuity rates change -0.22%
Enhanced rates:  
annuity rates change -0.35%
Gilt yields:  
annuity rates change 1 basis point



 
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Brexit uncertainty sends yields lower

Continued uncertainty over Britain's exit from the European Union with a deal acceptable to parliament and risk of a no deal is sending investors to the safety of gilts and bonds.

The 15-year gilt yield increased by 1 basis points to 1.63% during November 2018 with providers of standard annuities decreasing rates by an average -0.22% for this month and we would expect rates to increase by 0.32% in the short term if yields do not fall.

For smoker and enhanced annuity providers have decreased their rates by an average of -0.35% and rates may rise by 0.45% in the short term if yields do not fall.

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   32%
annuity rates no change   35%
annuity rates decrease   33%
Increases of:
up to 1.5%

 

Decreases of:
up to -2.7%

  Fig 1: Annuity rate changes for the whole market


For the month 32% of annuity rates increased by up to 1.5% with 35% remaining unchanged and 33% decreasing by up to -2.7%.

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


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 the latest updates see Annuity Rates Review.

Changes to the 15-year gilt yields

The yields change for the month from 1.62% to 1.63% 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 - November 2018
Day Rate (%) Change (bp*)
1 1.62 0
2 1.65 +3
5 1.70 +1
6 1.74 +4
7 1.70 0
8 1.74 +4
9 1.67 -7
12 1.65 -2
13 1.71 +6
14 1.71 0
15 1.60 -9
16 1.62 0
19 1.59 -3
20 1.61 +2
21 1.60 -1
22 1.62 +2
23 1.58 -4
26 1.62 +4
27 1.62 0
28 1.62 0
29 1.61 -1
30 1.63 +2
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points


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  65 £5,563 £5,094  
  70 £6,272 £5,976  
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