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6 February 2024 last updated

Annuity rates rise after gilt yields reach 2024 high as interest rate cut delayed

Gilt yields reach 2024 high
Standard rates:  
annuity rates change 1.51%
Enhanced rates:  
annuity rates change 2.90%
Gilt yields:  
annuity rates change 26 basis point
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15-year gilt yields chart - Based on figures for January 2024
Latest gilt yield chart

Annuity Rates UK - January 2024 review

Annuity rates are higher across the board as 15-year gilt yields increased +46 basis points to reach a high for 2024 of 4.41% after falling to 3.95% in December.

Providers increased annuity rates by as much as +4.7% for those aged 65 on 50% joint life with 3% escalation.

The rapid rise in gilt yields was due to analysts now expecting a delay in the first interest rate cut from March to June 2024 at the earliest with US consumer price index (CPI) inflation rising from 3.1% in November to 3.4% in December last year.

Strong economic data from the US showed jobless claims of 187,000, which is the lowest figure for 16 months and stronger than expected retail sales data. As a result the Federal Reserve stated interest rates are unlikely to be cut until the third quarter 2024.

In the UK CPI inflation reduced from 4.6% in October to 3.9% in November increasing to 4.0% in December 2023 and the Bank of England is in no hurry to raise interest rates.

Find related news here:
Gilt yields soar 45 basis points and pension annuity rates rise rapidly
Annuities down 4pc with falling gilt yields expecting lower interest rates

Providers of standard annuities increased annuity rates by an average of +1.51% for this month and we would expect rates to increase by +1.09% in the medium term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of +2.90% and we would expect rates to decrease by -0.30% 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   92%
annuity rates no change   0%
annuity rates decrease   8%
Increases of:
max 4.7%


Decreases of:
max -1.5%

  Fig 1: Annuity rate changes for the whole market

For the month 92% of annuity rates increased by up to +4.7% with 0% remaining unchanged and 8% decreasing by as much as to -1.5%.

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 3.95% to 4.21% or +26 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 - January 2024
Day Rate (%) Change (bp*)
2 4.08 +13
3 4.08 0
4 4.15 +7
5 4.21 +6
8 4.16 -5
9 4.18 +2
10 4.21 +3
11 4.24 +3
12 4.20 -4
15 4.22 +2
16 4.25 +3
17 4.41 +16
18 4.37 -4
19 4.34 -3
22 4.31 -3
23 4.38 +7
24 4.39 +1
25 4.38 -1
26 4.37 -1
29 4.29 -8
30 4.31 +2
31 4.21 -10
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points
News related stories:

Annuity rates at risk with lower gilt yields as inflation falls to 3.9pc
Gilt yields reduce 53 basis points with no prospect of interest rate rise
Annuity Rates
  Age Single Joint  
  55 £5,928 £5,650  
  60 £6,282 £5,992  
  65 £6,960 £6,473  
  70 £7,894 £7,160  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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