Annuities fall with lower gilt yields after Brexit uncertainty

15-year gilt yields chart - Based on figures for March 2019

March 2019 Review

Uncertainty over Brexit sends investors to safety of government bonds and gilts in March increasing the price and lowering yields with providers reducing rates for annuities.

The 15-year gilt yield increased by 28 basis points to 1.33% during March 2019 with providers of standard annuities decreasing rates by an average -1.73% for this month and we would expect rates to decrease by a further -1.07% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers have decreased their rates by an average of -3.31% and rates may rise by 0.51% in the short term if yields do not fall.

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   0%   0%   100% Increases of: up to 0.0%   Decreases of: up to -5.0%

Fig 1: Annuity rate changes for the whole market

Fig 2: Change in standard rates last month compared to gilt yields

Fig 3: Change in enhanced rates last month compared to gilt yields