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

3 April 2018 last updated

UK annuities risk fall after Trump trade tariffs on Chinese imports

UK annuities may fall with fear of economic uncertainty after Trump unveils $50 billion of trade tariffs on Chinese imports sending stocks lower and investors seeking safe havens of government bonds and gilts.

President Donald Trump unveiled $50 billion of trade tariffs on Chinese imports due to the long term unfair trade practices of China.

It has signaled the possibility of a trade war between the US and China and investors fear the economic uncertainty sending equity markets lower and the 15-year gilt yields are down 17 basis points at 1.58%.

Annuity rates are mainly based on gilt yields and we would expect to see providers reduce rates by 1.7% at some point in the future.

The trade tariffs are to punish China for taking US intellectual property at the expense of American companies with 1,300 products are expected to be targeted.

China has announced a 25% levy on $3 billion of US products imported to China escalating the rise of a trade war.

UK annuities risk fall as yields decrease
  Donald Trump $50 billion trade tariffs send gilt yields lower as investors seek safe havens
  More annuity topics
  Quarter 2 News 2018
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Annuity rates resisting lower yields

The 15-year gilt yields have reduced by 17 basis points to 1.58% in March down from a high for the year of 1.89% reached a month earlier with an expectation of higher US interest rates.

Gilt yields and annuity rates
Fig 1: Chart comparing standard annuity rates and 15-year gilt yields

Providers have resisted decreasing pension annuities and since August 2017 are higher by 2.80% compared to gilt yields up 1.70% over the same period.

Our benchmark example reached a two year high last month (see table above and chart below) which is based on a 65 year old buying a single life, level annuity with a fund of £100,000.

  Standard annuity rates and gilt yields
  Sep Oct Nov Dec Jan Feb Mar
Rate £5,473 £5,390 £5,503 £5,476 £5,546 £5,645 £5,626
Yield 1.34% 1.66% 1.63% 1.50% 1.75% 1.75% 1.58%

Annuities reached an all time low reached in August 2016 of £4,696 pa several months after the Brexit vote as investors sought the safety of government bonds and gilts.

Rates have increased to £5,626 pa as there is an expectation of higher interest rates in the UK and US during 2018 and possibly the reason why providers, such as Aviva, Just, Canada Life and Legal & General are buoyant about keeping annuity income high.

For our benchmark example income has increased by £930 pa since August 2016. In terms of lifetime income, the Office of National Statistics (ONS) would expect a male to live for 18.5 years and he will have £17,205 less over his lifetime. For a female she can expected to live for 20.9 years decreasing her lifetime income by £19,437.

The possibility of a trade war between the US and China would have a negative impact on yields and may offset the positive drive of higher interest rates. The White House has claimed 's trade surplus with the US has cost America
two million jobs.

Even so China has responded to Donald Trump with retaliatory tariffs of up to 25% on the $3 billion of food imports from the US including dried fruits, frozen pork and wine and the Dow Jones index has reduced by 500 points in response.

Annuities are resisting gilt yield uncertainty in the short term and further interest rate rises are expected which will help to keep yields at a higher level. There may be further falls in equities and gilt yields in the short term which could see lower annuity rates.

News related stories:
Annuities rise up to 5% with higher yields from US economic growth
Annuity rates rise to highest for the year as yields remain level
Pension annuity providers reduce rates despite interest rate rise
Enhanced annuities increase 4% as Just leads market with higher rates
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