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


26 February 2013 last updated
Annuity income lower as markets and gilts fall on Italy election deadlock

Annuity income for people remaining invested before buying annuities is lower as markets around the world fall after the Italian election faces deadlock creating concern about the ECB's ability to rescue Italy's bond market.

Equity markets are lower with the Dow Jones index reducing by 1.5% or 216 to close at 13,874 yesterday and the FTSE-100 index 1.3% or 85 points lower to close at 6,270 today.

European markets have fallen with Italy's MIB at 4.9%, the German DAX at 1.6% and the French CAC 2% down.

For a pension that tracks the the FTSE-100 index the fund would have reduced by 1.3% and this would mean that the annuity income expected would also reduce by this amount.

Once a pension annuity is purchased it cannot be changed so the lower income would be received for the lifetime of the pensioner at retirement.

 
Annuity income Italy election deadlock
 
  More annuity topics
  February News 2013
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2024
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates
 

ECB may not be able to support Italian bonds

The markets fear is that the European Central Bank (ECB) will not be able to support the Italian bond market as under the Outright Monetary Transactions (OMT) scheme as some 57% of the votes have gone to parties that are opposed to austerity measures.

For the OMT to work it requires an Italian coalition government to agree to the terms imposed by the EU and these include tough terms for implementing austerity measures.

The recent turnaround in confidence from investors occurred when the ECB stated it will do "whatever it takes" to support the euro and member's sovereign debt. If Italy's coalition no longer adhere to the terms of the OMT this pledge may start to unravel and contagion to spread. If could also mean yields for Italian 10-year bonds could rise to the critical 7% level without the ECB intervention.

Already Italy's borrowing costs for 10-year bonds has increased by 41 basis points to 4.89% with 420 billion of further borrowing required this year this will increase their costs. In Germany 10-year bond yields decreased by 10 basis points to 1.45% and in the UK 10-year gilt yields fell 11 basis points to 1.97%.

The fear experienced with the debt crisis last year forced investors to seek safe havens such as US Treasury notes, German Bunds and UK government bonds and gilts thereby driving up the price and lowering yields with annuities lowering as well.

Lower 15-year gilt yields could reduce UK annuity rates

UK annuity rates are based on the 15-year gilt yields and these have reduced by 12 basis points today, the largest amount since May last year. Just a few days ago gilt yields reduced by 9 basis points due to a combination of the US comments that they may reduce or stop Quantitative Easing or QE3 and the Bank of England suggesting they may inject up to £175 billion a new QE method.

The combined fall of 15-year gilt yields of 21 basis points means as a general rule that annuity rates will reduce by 2.1% at some time in the future. Annuities have been increasing due to higher yields this year and were 45 basis points higher at 2.76% so the falls this week will at the very least stop any further increases for standard rates with smoker and impaired annuity rates likely to fall slightly. The reason for this is that impaired annuities have increase aggressively in the last month whereas standard rates have lagged behind.

News related stories:
Pension annuity rates threat of £175bn QE from Bank of England
Best annuity income and markets fall 1.6% after US Fed stimulus fears
UK annuity rates rise 1.5% from Legal & General as gilt yields fall
Buying annuity boosted as gilt yields rise after EU-US trade deal
Best annuities threat as eurozone debt crisis grips markets
UK annuity rates could increase as 15-year gilt yields reach new high
Pension annuities income boosted as ECB pledges to save the euro
Related internet links:
BBC - European markets fall after Italian election deadlock
Guardian - Markets rocked by Italian political stalemate
Telegraph - ECB bond plan in jeopardy as Italy rejects austerity
Annuity Rates
  Age Single Joint  
  55 £6,132 £5,784  
  60 £6,532 £6,234  
  65 £7,247 £6,808  
  70 £8,170 £7,616  
£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 edge up with high yields
Annuity rates edge up Annuity rates up with gilt yields at a high of 4.71% as UK inflation misses target
Retirement income up 121% in four years
Record annuity rates and equity markets Retirement income up 121% with record high annuity rates and equity markets
Annuities rise with higher US inflation
Annuities and gilts rise Enhanced annuities rise as gilt yields reach record 4.70% with higher US inflation
Gilt yields record high after strong US data
Gilt yields at record high of 4.65% Gilt yields hit record high of 3.65% after strong US inflation and economic data
Annuity rates could recover by 3%
Annuity rates could recover 3pc Annuity rates could recover +3% after strong US jobs sends gilt yields higher

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page
Sharingpensions.co.uk   This website is for marketing purposes only and does not provide specific financial or legal advice. The website security is issued by GeoTrust and Equifax. Copyright©2001-24 Sharingpensions.co.uk. All Rights Reserved