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7 January 2023 last updated

Enhanced annuity rates up 5pc as gilt yields rise 50 basis points

Annuity rates up 5% as gilt yields rise
Standard rates:  
annuity rates change 3.64%
Enhanced rates:  
annuity rates change 5.03%
Gilt yields:  
annuity rates change 50 basis point
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15-year gilt yields chart - Based on figures for December 2022
Latest gilt yield chart

Annuity Rates UK - December 2022 review

Enhanced annuity rates rise 5.03% ending the year close to October highs as 15-year gilt yields increased 50 basis points to 4.02%.

For certain ages and features annuity rates are even higher especially for joint life enhanced and standard annuities with escalation for those aged 55 to 70 rising 6% to over 9%.

For a 60 year old 50% joint life with 3% escalation the income is higher by 9.61% to £4,321 pa, even higher than the figure in October after the mini budget.

Find related news here:
Annuity rates still at thirteen year high even with lower gilt yields
Gilt yields reach fourteen year high of 5.09pc with record annuity rates

For single life enhanced annuities income is higher than October for those aged 65 to 75 with the biggest rise by value for a 70 year old with 3% escalation rising £409 pa with income at a record £7,039 pa.

The 15-year gilt yields increased 50 basis points during December to 4.02% the highest closing for a month since September. Investors have concerns central banks intend to raise base rates further due to high inflation continuing in 2023.

Providers of standard annuities increased annuity rates by an average of +3.64% for this month and we would expect rates to rise by +1.36% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of +5.03% and we would expect rates to fall by -0.03% 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   98%
annuity rates no change   0%
annuity rates decrease   2%
Increases of:
max 9.6%


Decreases of:
max -3.5%

  Fig 1: Annuity rate changes for the whole market

For the month 98% of annuity rates increased by up to 9.6% with 0% remaining unchanged and 2% decreasing by as much as to -3.5%.

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 3.52% to 4.02% or +50 basis points. 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 - December 2022
Day Rate (%) Change (bp*)
1 3.48 -4
2 3.55 +7
5 3.49 -6
6 3.49 0
7 3.46 -3
8 3.51 +5
9 3.57 +6
12 3.61 +4
13 3.71 +10
14 3.70 -1
15 3.63 -7
16 3.67 +4
19 3.85 +18
20 3.93 +8
21 3.90 -3
22 3.94 +4
23 3.97 +3
27 3.96 -1
28 3.99 +3
29 4.01 +2
30 4.02 +1
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points
News related stories:
Retirement income up 104pc in two years as annuities hit record high
Gilt yields reach fourteen year high of 5.09pc with record annuity rates
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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