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10 January 2020 last updated

Gilt yields rise as US-China trade deal could boost global growth

Providers increase annuity rates
 
Standard rates:  
annuity rates change 0.98%
Enhanced rates:  
annuity rates change 0.95%
Gilt yields:  
annuity rates change 14 basis point
 
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15-year gilt yields chart - Based on figures for December 2019
Latest gilt yield chart

December 2019 Review

Standard annuities are up by 0.98% for December with 15-year gilt yields rising 14 basis points following an expectation of a phase one US-China trade deal which could boost global growth.

The 15-year gilt yield are higher by 14 basis points to 1.07% during December 2019 ending the year above one percent for the first time in six months.

Providers of standard annuities increasing annuity rates by an average 0.98% for this month and we would expect rates to reduce by 0.42% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 0.95% and rates and we would expect rates to increase 0.44% in the medium 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   91%
annuity rates no change   4%
annuity rates decrease   4%
Increases of:
max 2.6%

 

Decreases of:
max -0.5%

  Fig 1: Annuity rate changes for the whole market


For the month 91% of annuity rates increased by up to 2.6% with 4% remaining unchanged and 4% decreasing by up to -0.5%.

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 0.93% to 1.07% or 14 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 - December 2019
Day Rate (%) Change (bp*)
2 0.97 +4
3 0.92 -5
4 1.00 +8
5 1.02 +2
6 1.01 -1
9 1.01 0
10 1.04 +3
11 1.02 -2
12 1.07 +3
13 1.02 -5
16 1.06 +4
17 1.02 -4
18 1.02 0
19 1.04 2
20 1.03 1
23 1.02 -1
24 1.02 0
27 1.01 -1
30 1.12 +11
31 1.07 -5
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

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Gilt yields rise as Trump delays tariff on $200bn China trade
Annuity Rates
  Age Single Joint  
  55 £3,947 £3,702  
  60 £4,391 £4,052  
  65 £5,098 £4,638  
  70 £6,055 £5,457  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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