FTSE-100 index reaches a new high

People retiring that remain invested before taking their benefits have seen their pension funds increase in vale as the FTSE-100 index reaches a new high of 7,037 during the month after starting the year at 6,566.

This has countered the recent volatility in gilt yields and annuity rates which are near their all time lows.

Standard providers were up slightly by an average of 0.03% and we would expect to see decrease of 1.83% in the short term and in the medium term of 3 months annuity rates will increase by 2.33%.

Smoker and enhanced annuity providers decrease their rates by 2.67% on average with an increase of 0.87% possible in the short term and in the medium term of 3 months we can expect an increase of 5.47%.

Equity markets started at 6,947 and decreased by 92 points to end at 6,855.

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   11%   26%   63% Increases of: up to 2.1%   Decreases of: up to 5.8%

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

15-Year Gilt Yields - March 2015 Mon 2nd Tues 3rd Wed 4th Thurs 5th Fri 6th 2.16%   0.01 2.24%   0.08 2.26%   0.02 2.24%   0.02 2.33%   0.09 Mon 9th Tues 10th Wed 11th Thurs 12th Fri 13th 2.32%   0.01 2.21%   0.11 2.17%   0.04 2.20%   0.03 2.13%   0.07 Mon 16th Tues 17th Wed 18th Thurs 19th Fri 20th 2.10%   0.03 2.09%   0.01 2.01%   0.08 1.90%   0.11 1.90% Mon 23th Tues 24th Wed 25th Thurs 26th Fri 27th 1.90% 1.87%   0.03 1.88%   0.01 1.96%   0.08 1.91%   0.05 Mon 30th Tues 31st       1.96%   0.04 1.96%

Fig 2: Daily 15-year gilt yields and changes