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

28 February 2014 last updated
Annuity rates recover 11.2% last year as gilt yields and equities bounce back

Last year experienced a bounce back in gilt yields with all annuity rates higher by 11.2% coupled with improving economies equity markets have helped to increase pension funds for those that remain invested further improving retirement income.

In January 2013 a deal between was negotiated over the US fiscal cliff preventing $600 billion of spending cuts and tax rises.

This avoided the US heading back into recession boosting market confidence with investors moving funds away from bonds and gilts into investments increasing yields and equity markets.

As annuity rates are mainly based on the 15-year gilt yields which were up 111 basis points. As a general rule this would result in annuities rising 11.1% and they actually increased by 11.2% during the year.

People that remained invested before taking their benefits they gained from the FTSE-100 index rising by 14.4% resulting in a significant improvement in income.

Enhanced annuity rates higher
  Both annuity rates and equities increased giving some people 30.6% more retirement income
  More annuity topics
  Quarter 1 News 2014
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Standard annuities up to 15.6% higher

Annuities can have a range of features added such as joint life, guaranteed periods and escalation. The average increase in the standard rates last year was 10.1% and varied considerably with younger people benefiting the most with the biggest gains. The following chart shows ages from 55 to 75 with a £100,000 fund, no guaranteed period and single life basis.

Standard annuity 1 month changes
Fig 1: Change in standard annuity rates last year to Jan 2014

For standard annuities the largest gain was for those aged 55 with with rates up by 15.6%. The highest increases applied for level rates and those with guaranteed periods and the rates for joint life were loser at between 12% to 14%. For those selecting escalation the gains were less with the highest at 9.2% and the lowest 3.9% for a 50% joint life annuity with 3% escalation.

Enhanced annuities up to 22.6% higher

The average for the smoker and enhanced rates was better than standard annuities at 12.1%. The following chart shows enhanced rates for ages from 55 to 75 with a £100,000 fund, no guaranteed period and single life basis.

Standard annuity 1 month changes
Fig 2: Change in enhanced annuity rates last year to Jan 2014

For smoker and enhanced annuities the gains were higher with the maximum for those aged 55 selecting a 3% escalating rate on a single life basis where the was 22.6%. Again younger people benefited for the level rates with gains of 13% to 18% for those aged 55 to 65. The lowest gains were for people aged 75 on a single life basis with 3% escalation with gains of 6.1%.

People retiring with 30.6% more income

For those that remained invested during the year in a fund that tracked the FTSE-100 index would have benefited from a combined improvement in equities and annuity rates.

The FTSE-100 index increased 852 points or 14.4% from 5,897 to 6,749. As an example, a person aged 65 with a fund of £100,000 in December 2012 could have received an annuity of £5,425 pa on a single life and level basis. One year later their fund would have increased to £114,440 and the annuity rates increased by 14.2% which means the income would have improved by £1,665 pa to £7,090 pa.

In terms of lifetime income, the Office of National Statistics (ONS) would expect a male to live for 17.3 years and he will have £28,804 more over his lifetime. For a female she can expected to live for 20.4 years increasing her income by £33,966.

News related stories:
Buying pension annuities now made safer with US congress vote
Pension annuity income and equities rise after fiscal cliff deal
Annuity Rates
  Age Single Joint  
  55 £4,574 £4,142  
  60 £4,961 £4,610  
  65 £5,691 £5,238  
  70 £6,478 £6,098  
£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 rise due to inflation fears
Gilt yields rise over 2pc 15-year gilt yields are up 28 basis points as investors expect rise in base rates
Annuity rates soar 19pc to high for 6 years
Annuity rates soar19% Annuity rates reach a six year high up 19% since January 2021 as gilt yields rise
Gilt yields rise 20 basis points
Gilt yields rise 20 basis points Federal Reserve to raise rates more aggressively with gilt yields up to 1.82%
Annuities are at a 3 year high
Pension annuities could fall with Omicron variant Higher gilt yields sends annuities to a three year high up 11.1% in the last year
Pension annuities rise 9pc over a year
Pension annuities rise 9pc Pension annuities rise almost 9pc as yields increase ahead of higher base rates

  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