Annuities fall as gilt yields recover after Bank of England cut rates to 5pc

15-year gilt yields chart - Based on figures for August 2024

Annuity Rates UK - August 2024 review

Providers reduce annuities by as much as -2.9% after the Bank of England decreased interest rates to 5.0%.

During the month 15-year gilt yields recovered to 4.29% similar to previous levels as the Federal Reserve is expected to reduce interest rates at a faster rate than the Bank of England.

Find related news here:
BoE cut rates to 5pc sends yields lower and threat to annuities
Gilt yields fall 19 basis points ahead of BoE interest rate decision

Providers of standard annuities decreased annuity rates by an average of -1.87% this month and we would expect rates to increase by +1.77% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers decreased their rates by an average of -0.59% and we would expect rates to increase by +0.49% 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   18%   2%   80% Increases of: max 0.8%   Decreases of: max 2.9 %

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