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5 May 2023 last updated

Pension annuities up 3pc as yields rise due to expected higher base rates

Pension annuities up 3%
Standard rates:  
annuity rates change 3.30%
Enhanced rates:  
annuity rates change 2.35%
Gilt yields:  
annuity rates change 24 basis point
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15-year gilt yields chart - Based on figures for April 2023
Latest gilt yield chart

Annuity Rates UK - April 2023 review

Standard annuity rates are up 3.30% with higher gilt yields as investors are expecting the Bank of England to increase base rates by at least 0.25% in May.

Our benchmark example for a 65 year old using £100,000 to purchase a single life and level annuity remains at a twelve year high and has increased 4.11%. The highest increase is for a 75 year old purchasing a 50% joint life and level annuity increasing 7.91% in April.

Inflation in the UK remains in double figures at 10.1% although it was expected to fall further with 15-year gilt yields increasing by 24 basis points from 3.79% and ending April at 4.03%.

Find related news here:
Annuity rates could rise 2% as gilt yields recover after banking crisis
Yields lower by 34 basis points with fear of contagion from bank bailout

Providers of standard annuities increased annuity rates by an average of +3.30% for this month and we would expect rates to fall by -0.20% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of +2.35% and we would expect rates to rise by +0.75% 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   97%
annuity rates no change   1%
annuity rates decrease   2%
Increases of:
max 7.9%


Decreases of:
max -0.6%

  Fig 1: Annuity rate changes for the whole market

For the month 97% of annuity rates increased by up to 7.9% with 1% remaining unchanged and 100% decreasing by as much as to -0.6%.

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 3.79% to 4.03% or +24 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 - April 2023
Day Rate (%) Change (bp*)
3 3.73 -6
4 3.75 +2
5 3.75 0
6 3.72 -3
11 3.85 +13
12 3.87 +2
13 3.88 +1
14 3.96 +8
17 4.00 +4
18 4.06 +6
19 4.16 +10
20 4.05 -11
21 4.06 +1
24 4.03 -3
25 3.99 -4
26 4.01 +2
27 4.10 +9
28 4.03 -7
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points
News related stories:
Gilt yields rise 43 basis points as investors expect higher base rates
Pension annuities could rise 4pc as Fed more hawkish with inflation
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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