Providers increase annuity rates over 5pc as yields recover from all time lows

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

November 2019 Review

Standard annuities are up by 5.14% for November as the 15-year gilt yields continue to recover with more optimism for the US-China limited trade deal being ratified before the end of the year.

Investors expect the Conservative Party to have a majority although it is uncertain if this would be sufficient to successfully negotiate a Brexit agreement with the EU.

The 15-year gilt yield are higher by 7 basis points to 0.93% during November 2019 with providers of standard annuities increasing annuity rates significantly by an average 5.14% for this month and we would expect rates to reduce by -2.46% in the medium term if yields remain at current levels.

For smoker and enhanced annuity providers have increased their rates by an average of 1.72% and rates and we would expect rates to increase 0.65% in the medium 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   95%   3%   2% Increases of: max 9.8%   Decreases of: max -0.6%

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