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12 October 2022 last updated

Annuity rates increase 15pc as Mini Budget sends yields to record levels

Annuity rates increase 15%
Standard rates:  
annuity rates change 14.95%
Enhanced rates:  
annuity rates change 14.72%
Gilt yields:  
annuity rates change 105 basis point
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15-year gilt yields chart - Based on figures for September 2022
Latest gilt yield chart

Annuity Rates UK - September 2022 review

Providers increase annuity rates by almost 15% on average during September 2022 after gilt yields rise a record amount following the government's the Mini Budget on 22 September 2022. Pension annuities for those aged 55 buying a 50% joint life annuity with 3% escalation increased by over 25% in the month.

At one time the 15-year gilt yields were up 177 basis points from 3.19% to 4.96% near record levels over fourteen years. Investors sold gilts as they were unconvinced about the £45 billion cost of unfunded tax cuts from the government.

Only intervention from the Bank of England on 28 September 2022 to buy gilts halted the record -73 basis points fall in yields before rising to 4.24% for the month.

Find related news here:
Annuities rise 12pc to thirteen year high after Mini Budget fallout
Gilt yields up 87 basis points as investors expect base rates to rise

Providers of standard annuities increased annuity rates by an average of 14.95% for this month and we would expect rates to rise by 0.70% in the medium term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 14.72% and we would expect rates to rise by 2.49% in the medium term if yields do not fall.

Previous record increases for annuities in June 2022 may mean providers are more conservative about raising annuity rates in September.

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 25.1%


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 25.1% 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 3.19% to 4.24% or +105 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 - September 2022
Day Rate (%) Change (bp*)
1 3.29 +11
2 3.35 +6
5 3.30 -5
6 3.49 +19
7 3.42 -7
8 3.54 +12
9 3.49 -5
12 3.48 -1
13 3.53 +4
14 3.45 -8
15 3.50 +5
16 3.47 -3
19 3.46 -1
20 3.62 +16
21 3.61 -1
22 3.81 +20
23 4.09 +28
26 4.62 +53
27 4.87 +25
28 4.24 -73
29 4.45 +21
30 4.24 -21
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points
News related stories:
Annuity rates rise by record 7pc last month as gilt yields weaken
Gilt yields fall 33 basis points off peak due to investor recession fears
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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