Annuity Rates, Annuities, Pensions, Divorce Free Fixed Term Quote
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources
 

16 June 2016 last updated

Annuity income threat as risk of Brexit vote lowers yields and markets

Annuity income is under threat as investors seek the safe haven of bonds and gilts with the risk of a Brexit vote sending equity markets lower and the 15-year gilt yields to an all time low of 1.66% down 27 basis points.

Fear over a Brexit vote with the EU Referendum next week has seen investors move their assets to safe havens such as Treasury Notes, German Bunds and UK government bonds.

The 15-year gilt yields were as high as 2.10% at the beginning of may and have since reduced to an all time low of 1.63% before recovering to 1.66% a fall of 27 basis points in June.

UK annuity rates are based mainly on the 15-year gilt yields and a 27 bass point decrease in yields would result in a 2.7% fall in rates at some time from providers.

Equity markets have also reduced with the FTSE-100 index lower by 5.3% over the last week. many people retiring remain invested in equities before they purchase their annuities and this would reduce their annuity income.

 
Brexit vote lowers yields and equities
  Brexit vote fears send equity markets and gilt yields lower as investors seek safe havens
  More annuity topics
  Quarter 3 News 2016
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2016
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 

Sharp dip in yields and equities

Uncertainty about the outcome of the EU Referendum has sent equity markets lower to 5,966 a fall of 335 points or 5.6% over the week.

Gilt yields and equity markets fall
Fig 1: Chart comparing equity markets and 15-year gilt yields


The above table shows how both yields and equities had recovered since reaching recent lows in February 2016. The closer than expected polls could result in a Brexit vote leading to a period of uncertainty for investors and a need to find secure homes for assets in the short term.

It is likely volatility will continue for the rest of the month making it difficult for people retiring to have any certainty over the annuity income they can receive.

For our benchmark of a person aged 65 years old with a fund of £100,000 buying a lifetime annuity on a single life, level basis could purchase an income of £5,217 pa a week ago. If they are invested in equities tracking the FTSE-100 index their fund would be lower by 5.6% reducing the the annuity income by £292 pa to £4,924 pa.

Over the lifetime of the annuitant and based on the Office of National Statistics (ONS) we would expect a male to live for 17.3 years and he will have £5,051 less over his lifetime. For a female she can expected to live for 20.4 years decreasing her income by £5,956.

News related stories:
Pension annuities lower by 9% over the year from leading providers
Enhanced annuities lower as providers merge to form new group
Annuity rates reduce by 4% from impaired provider Just Retirement
Annuity Rates
  Age Single Joint  
  55 £4,066 £3,782  
  60 £4,544 £4,240  
  65 £5,246 £4,794  
  70 £6,045 £5,433  
£100,000 purchase, level rates, standard
Unisex rates and joint life basis
  Annuity Rates  
Annuity Quotes
  Plan your annuity and get quotes from the 12 leading providers  
 
  free annuity quote Free Annuity Quotes
  annuity quote no obligation No Obligation
  annuity quote all providers From All Providers
 
  Annuity Quote  
  Annuity Rates News:

Pension advice 1,500 allowance
Pension advice allowance New allowance of 1,500 for advice at retirement to be launched from April
Flexi-access drawdown with 23% gain
Drawdown gain from rise in equity markets Equity markets rise with drawdown funds higher by up to 23% over the year
Liverpool Victoria exits annuity market
Liverpool Victoria exits impaired annuity market Providers are leaving the impaired annuity market due to falling rates and sales
Who will use flexi-access drawdown
Flexi-access drawdown HMRC estimates that 130,000 people will use the new pension plans next year

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook and Google+
  Facebook Page Twitter Page Twitter Page
Sharingpensions.co.uk   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-17 Sharingpensions.co.uk. All Rights Reserved