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7 June 2024 last updated

Annuity rates edge up with high gilt yields as UK inflation misses target

Annuity rates edge up
Standard rates:  
annuity rates change 1.10%
Enhanced rates:  
annuity rates change 0.57%
Gilt yields:  
annuity rates change 3 basis point
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15-year gilt yields chart - Based on figures for May 2024
Latest gilt yield chart

Annuity Rates UK - May 2024 review

Annuity rates edged up by +1.1% with 15-year gilt yields increasing to a record high of 4.71% this year after the amount inflation reduce missed the forecast.

The UK the consumer price index (CPI) was 3.2% in March reducing to 2.3% in April due to lower gas and electricity prices whereas the forecast was for 2.1%.

In the US the economy remains strong and a series of poor Treasury auction demand sends government yields higher adding to the pressure for higher gilt yields.

Find related news here:
Annuities and gilt yields rise as Fed talk of rate hikes with US inflation
Gilt yields at record high after strong US data and dashed rate cut hopes

Providers of standard annuities increased annuity rates by an average of +1.10% this month and we would expect rates to decrease by -1.40% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers increased their rates by an average of +0.57% and we would expect rates to decrease by -0.87% 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   92%
annuity rates no change   6%
annuity rates decrease   2%
Increases of:
max 3.0 %


Decreases of:
max 0.2%

  Fig 1: Annuity rate changes for the whole market

For the month 92% of annuity rates increased by up to +3.0% with 6% remaining unchanged and 2% decreasing by as much as -0.2%.

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 4.65% to 4.62% or -3 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 - May 2024
Day Rate (%) Change (bp*)
1 4.69 +4
2 4.61 -8
3 4.55 -6
7 4.45 -10
8 4.46 +1
9 4.46 0
10 4.50 +4
13 4.50 0
14 4.49 -1
15 4.36 -13
16 4.37 +1
17 4.45 +8
20 4.50 +5
21 4.45 -5
22 4.53 +8
23 4.55 +2
24 4.55 0
28 4.58 +3
29 4.71 +13
30 4.65 -6
31 4.62 -3
  Table 1: Daily 15-year gilt yields and changes
* bp - basis points
News related stories:
Annuity rates could recover 3pc as strong US economy send yields higher
Pension annuities fall 3pc with lower yields and talk of interest rate cuts
Annuity Rates
  Age Single Joint  
  55 £6,132 £5,784  
  60 £6,532 £6,234  
  65 £7,247 £6,808  
  70 £8,170 £7,616  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
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