Annuity Rates, Annuities, Pensions, Divorce Annuity Rates Charts
Home News Annuity Rates Annuities Pension Annuity Impaired Annuity Annuity Quotes Pensions Divorce Resources

30 June 2013 last updated
Annuity Rates - June 2013

As gilt yields continue to rise providers of annuities have increased rates significantly after US Federal Reserve plan to reduce their stimulus package this year.

Standard rates:  
annuity rates up 2.33%
Enhanced rates:  
annuity rates up 5.11%

With the 15-year gilt yields reaching at high of 3.08% last month a 42 basis point rise providers have increase annuity rates across the board although standard rates have more room for further improvements.

Smoker and enhanced annuity rates and up even more aggressively and in the medium term of 6 months now look too high. However, in the short term there remains the opportunity for people to secure these better than expected rates.

The US stimulus is used to buy bonds and gilts increasing prices and without this liquidity the lack of support will deflate the bond bubble. If the Fed continues this their $85 billion a month programme prices will rise again reducing yields and annuity rates.

Annuity Rates Review June 2013
  Standard and enhanced annuities increase sharply after gilt yields surge to higher levels
  More annuity topics
  June News 2013
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Still room for improvement in the short term

15-year gilt yields increased 42 basis points which means we would expect to see annuity rates rise by 4.2%. Find out more about the change in gilt yields:

Gilt yields surge to 3.08% high as US Federal Reserve ends stimulus

In the short term we would expect standard rates to increase a further 1.87% on average with lifestyle enhanced and smoker annuities decreasing by 0.91% on average.

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 increase   100%
annuity rates no change   0%
annuity rates decrease   0%
Increases of:
1.3% - 7.8%

  Decreases of:
  Fig 1: Annuity rate changes for the whole market

This month 100% of annuities increased for both standard, enhanced and smoker rates by between 1.3% and 7.8%. In particular the impaired annuity providers have dominated the largest rises and may have over extended their offering due to competition and to meet year end targets, such as Just Retirement.

Equity markets started at 6,583 and reduced 368 points to end at 6,215. This represents a 5.5% decrease and for people that remain invested up to the point they take their benefits the fall may have been offset by the increase in pension annuity rates.

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

Standard annuities have lagged behind the rise in 15-year gilt yields and there is still room for improvement with single life, level and 10-year guarantee which could still rise the most by 2.45%. The following chart shows the six month changes.

Standard annuity 6 month changes
Fig 3: Change in standard rates last 6 months compared to gilt yields

Over the last six months 3% escalating annuities for both single and joint life can increase the most by between 4.5% and 4.9%. The fact that both short and medium term changes in rates relative to yields show improvements can be made indicates the providers are likely to make changes shortly.

What happened to enhanced rates

Lifestyle smoker and enhanced annuities have increased the most and all annuities have exceed the rise in yields. In the short term it is likely that annuity rates will decrease slightly especially if yields drift back down as can be seen in the following chart.

Enhanced annuity 1 month changes
Fig 4: Change in enhanced rates last month compared to gilt yields

In the medium term of 6 months decreases of between 1.7% and 6.1% could occur and in particular rates for 50% joint life with 3% escalation.

Enhanced annuity 6 month changes
Fig 5: Change in enhanced rates last 6 months compared to gilt yields

The impaired providers are competitive at the moment with Just Retirement at it's year end which could mean it needs to hit certain volume targets. This is driving rates higher so we could see some small reductions in the next few months especially if gilt yields decrease from their recent highs. See Annuity Rates Review For the latest updates.

News related stories:
Gilt yields surge to 3.08% high as US Federal Reserve ends stimulus
Enhanced annuities up 7.8% and now at risk of falls in medium term
Best annuity rates could rise 8% as gilt yields soar 39 basis points
Annuity income and equities reduce as Fed plans to stop stimulus

Annuity Rates
  Age Single Joint  
  55 £3,851 £3,569  
  60 £4,268 £3,973  
  65 £4,965 £4,581  
  70 £5,831 £5,274  
£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:

Annuity rates decrease with Omicron
Annuity rates decrease due to Omicron variant Annuity rates fall up to -4.8% with lower gilt yields due to fears over Omicron
Pension annuity could fall 1pc due to Covid
Pension annuities could fall with Omicron variant New Covid variant Omicron reduce yields and pension annuities could fall 1pc
Purchased life annuity 20pc more income
Purchased life annuity 20% more income Purchased life annuity offers 20pc more net income to taxpayers than pension annuity
Annuities rise even after gilt yields fall
Pension annuities rise up to 2.67% Pension annuities fall by 2.67% even though gilt yields reduced by 9 basis points
Care funding may not start until 2026
Gilt yields rise as Fed signals tapering Government's care funding will not start until the 86,000 care cap is reach

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-22 All Rights Reserved