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9 May 2019 last updated

UK enhanced annuities rise with stronger data from China and eurozone

UK enhanced annuities rise
Standard rates:  
annuity rates change 0.53%
Enhanced rates:  
annuity rates change 1.14%
Gilt yields:  
annuity rates change 16 basis point
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15-year gilt yields chart - Based on figures for April 2019
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April 2019 Review

UK enhanced annuities have increased 1.14% for the month as gilt yields rise 16 basis points. Stronger than expected economic data from China and the eurozone has seen investors leave the safety of bonds and gilts sending the yield higher.

Investors have been concerned with the prospects of China's economy and new economic data reveals exports increased 14.2% in March against analyst expectations of an 8% increase.

The eurozone strengthened as growth increased to 0.4% in the first quarter of 2018 suggesting the area can avoid a downturn. In addition unemployment in the eurozone has reached the lowest level in a decade with the jobless figure at 7.7% in March.

The 15-year gilt yield increased by 16 basis points to 1.49% during April 2019 with providers of standard annuities decreasing rates by an average -0.53% for this month and we would expect rates to increase by 2.13% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 1.14% and rates may rise by 1.28% 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   54%
annuity rates no change   3%
annuity rates decrease   43%
Increases of:
up to 5.6%


Decreases of:
up to -2.5%

  Fig 1: Annuity rate changes for the whole market

For the month 54% of annuity rates increased by up to 5.6% with 3% remaining unchanged and 43% decreasing by up to -2.5%.

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 1.33% to 1.49% or 16 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 - April 2019
Day Rate (%) Change (bp*)
1 1.38 +5
2 1.33 -4
3 1.41 +8
4 1.41 0
5 1.43 +2
8 1.43 0
9 1.41 -2
10 1.40 -1
11 1.45 +5
12 1.51 -4
15 1.51 0
16 1.51 0
17 1.53 +2
18 1.51 -2
23 1.53 +1
24 1.50 -3
25 1.47 -3
26 1.46 -1
29 1.47 +1
30 1.49 +2
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Guardian - Eurozone strengthens as growth picks up
Marketwatch - Yields hit a high as China data improves
News related stories:
Enhanced annuity rates down over 3% as investors seek safe havens
Annuities fall with lower gilt yields after Brexit uncertainty
UK annuities could rise as investors leave safe havens
Gilt yields rise as Trump delays tariff on $200bn China trade
Pension annuities flat despite China reporting slow growth
Annuity Rates
  Age Single Joint  
  55 £5,736 £5,481  
  60 £6,132 £5,880  
  65 £6,860 £6,462  
  70 £7,678 £7,215  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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