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10 December 2020 last updated

Successful vaccine for Covid-19 sends gilt yields higher

Gilt yields rise with vaccine
Standard rates:  
annuity rates change 0.29%
Enhanced rates:  
annuity rates change 0.07%
Gilt yields:  
annuity rates change 4 basis point
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15-year gilt yields chart - Based on figures for November 2020
Latest gilt yield chart

November 2020 Review

Drugs company Pfizer and BioNTech announce successful results of their Covid-19 vaccine trials sending gilt yields up 23 basis points to a high of 0.66%.

With an efficacy level of 90.0% or higher for the Pfizer vaccine and another vaccine from Moderna announcing their results on 16 November with efficacy levels of 94.5% suggesting a possible end to the current economic uncertainty.

Although gilt yields reduced to 0.53% by the end of the month if could mean some improvement in annuity rates is possible if yields remain at current levels.

Find related news here:
Annuity rates could rise as gilt yields bounce back with vaccine results
Annuities at risk with volatile gilts due to Covid-19 restrictions in Europe

The 15-year gilt yields increase by 4 basis points to 0.53% during October after a volatile month.

Providers of standard annuities decreased annuity rates by an average of -0.29% for this month and we would expect rates to rise by 0.69% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have reduced their rates by an average of -0.07% and rates and we would expect rates to rise by 0.47% 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   2%
annuity rates no change   76%
annuity rates decrease   22%
Increases of:
max 0.3%


Decreases of:
max -2.6%

  Fig 1: Annuity rate changes for the whole market

For the month 2% of annuity rates increased by up to 0.3% with 76% remaining unchanged and 22% decreasing by as much as to -2.6%.

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 0.49% to 0.53% or 4 basis point. Table 1 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:

15-Year Gilt Yields - November 2020
Day Rate (%) Change (bp*)
2 0.45 -4
3 0.50 +5
4 0.43 -7
5 0.46 +3
6 0.51 +4
9 0.61 +10
10 0.64 +3
11 0.66 +2
12 0.59 -7
13 0.57 -2
16 0.59 +2
17 0.56 -3
18 0.58 +2
19 0.57 -1
20 0.54 -3
23 0.53 -1
24 0.56 +3
25 0.54 -2
26 0.50 -4
27 0.50 0
30 0.53 +3
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Fear of new Covid-19 restrictions in Europe sends gilt yields lower
Providers raise annuity rates as gilt yields bounce 22 basis points
Pension annuities fall as Federal Reserve hold rates until 2022
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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