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

4 September 2012 last updated
UK annuities would lower if Eurozone AAA rating was downgraded

UK annuities under threat if the credit rating downgrade for the European Union is give by credit agency Moody's.

The credit agency Moody's has warned it may downgrade the European Union from the current AAA rating and has placed the outlook to negative from stable. This means if the European Union continues on the current course it may face the prospect of a lower rating.

The implications would be significant for UK annuities as many institutional investors must hold a certain percentage in AAA rated bonds and gilts. If the UK retains this rating and the EU does not more funds purchasing UK government bonds and gilts would increase the price and reduce the yield with the effect of reducing annuity rates further.

The statement from Moody's is ahead of the European Central Bank (ECB) meeting to explain how they will support the euro and member states that require a bailout.

UK annuities rating downgrade
  More annuity topics
  September News 2012
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

The risk to EU and UK annuities

The risk to UK annuities would be for the UK to retain the AAA rating while the European Union is downgraded as this would represent an imbalance of the current position resulting in a flow of investor funds to UK government bonds and gilts. It is more likely that the UK would also be downgraded if the EU is downgraded as Moody's have indicated the AAA rating depends on the strength of the main contributors to the EU budget accounting for 45% of revenue, Germany, France, UK and Netherlands.

Another risk is if the rating of the four main contributors were downgraded this would trigger the downgrade of the EU rating. The other trigger is that the members do not prioritise their commitment to the debts of the EU and this brings in to play the ECB and their plan to support the debts of sovereign members by using the European Stability Mechanism (ESM). The ECB will hold their meeting on the 6 September to provide more details of how this will work and will form part of the medium term review for the EU rating.

Risks that affect the creditworthiness of the EU are therefore the rating position of Germany, France, UK and Netherlands, the creditworthiness of other member states and the commitment of member states to maintain a fiscal framework to reduce the risk of future bailouts. If the UK credit rating could remain at AAA while the EU is downgraded UK pension annuities would be significantly lower although it is more likely that all the main contributors would be downgraded at the same time.

News related stories:
Retirement annuities unlikely to gain after UK loses AAA rating
Pension annuity rates may increase if UK loss of AAA rating
Annuity Income falls as S&P downgrades Spain's credit rating
UK annuity rates can increase with ECB bond buying plan
Pension annuities income boosted as ECB pledges to save the euro
Related internet links:
BBC - Mood's Lowers EU rating outlook to negative
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