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10 March 2021 last updated

Gilt yields rise record amount of 60 basis points on inflation fears

Gilt yields record rise
Standard rates:  
annuity rates change 3.22%
Enhanced rates:  
annuity rates change 2.56%
Gilt yields:  
annuity rates change 60 basis point
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15-year gilt yields chart - Based on figures for February 2021
Latest gilt yield chart

February 2021 Review

The 15-year gilt yields have increase by a record 60 basis points in February to 1.14% as investors fear inflation rise as countries exit lockdown rules later this year.

This is the highest level gilt yields have reached since June 2019 and providers have increased annuity rates. There is the potential of further increases in rates if yields can maintain the current rise.

Find related news here:
Gilt yields fall with more Covid-19 cases sending annuity rates lower
Successful vaccine for Covid-19 sends gilt yields higher

Providers of standard annuities increased annuity rates by an average of 3.22% for this month and we would expect rates to rise by 2.78% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 2.56% and rates and we would expect rates to rise by 3.44% 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   100%
annuity rates no change   0%
annuity rates decrease   0%
Increases of:
max 7.4%


Decreases of:
max -0.0%

  Fig 1: Annuity rate changes for the whole market

For the month 100% of annuity rates increased by up to 7.4% with 0% remaining unchanged and 0% decreasing by as much as to -0.0%.

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 0.54% to 1.14% or 60 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 - February 2021
Day Rate (%) Change (bp*)
1 0.54 0
2 0.57 +3
3 0.59 +2
4 0.66 +7
5 0.72 +6
8 0.70 -2
9 0.68 -2
10 0.71 +3
11 0.69 -2
12 0.75 +6
15 0.81 +6
16 0.86 +5
17 0.80 -6
18 0.86 +6
19 0.93 +7
22 1.04 +11
23 1.10 +5
24 1.12 +2
25 1.16 +4
26 1.14 -2
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points

News related stories:
Annuities set to rise 3pc as yields boosted by higher inflation forecast
Annuity rates higher as investors more optimistic for the economy
Annuity rates could rise as gilt yields bounce back with vaccine results
Annuity Rates
  Age Single Joint  
  55 £3,620 £3,320  
  60 £4,081 £3,783  
  65 £4,786 £4,382  
  70 £5,656 £5,102  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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