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

20 July 2012 last updated
Best annuity rates decrease possible with Spain's debt crisis

Fear over Spain's sovereign debt has pushed yields on 10-year bonds above the 7% level as investors move funds to safe havens which could result in the best annuity rates decreasing.

Even though Eurozone finance ministers have approved a 100 billion euro loan to Spanish banks investors fear the true extend of Spain's debt crisis with the cost of 10-year bonds in their latest auction rising 27 basis points to 7.25%.

This is above the 7% level though to be unsustainable in the long term and an indication of a possible bailout such as with as Ireland, Greece and Portugal.

Fear that the Eurozone cannot gain control of the debt crisis will drive investors to seek safe havens such as German bund's or UK government bonds and gilts until they can be confident the crisis is under control. As a result lower gilt yields will force providers to reduce the best annuity rates which means lower income for UK pensioners.

Spain debt crisis reduce annuity rates
  More annuity topics
  July News 2012
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Lower annuity rates for UK pensioners

For UK pensioners as the price of the gilts increase the yield decreases and as the best annuity rates are based on the 15-year gilt yields a fall in the yields will result in lower annuity rates.

Providers of pension annuities may not immediately reduce annuity rates after gilt yields have decreased although a continued decline of yields will drive annuity rates lower over a four week period. The 15-year gilt yields have reduced by 4 basis points to 2.05% and for the month of July these have reduced by 24 basis points. Over time this will result in a 2.4% reduction in annuity rates and part of this has been reflected in smoker and impaired annuities with reductions of about 1%. For the latest updates see Annuity Rates Review.

To recover the falls in annuities pensioners may consider an investment backed with profits annuity that would pay income 30% higher than a conventional annuity. As the fund is invested the income could go down in the future although this is smoothed by the provider which significantly reduces volatility. Pensioners would need to accept this slightly higher risk and should have other income sources from pensions and savings.

Others opportunities for a higher income than the open market option standard annuity is an enhanced annuity if the pensioner suffers from lifestyle medical conditions such as high blood pressure, Cholesterol, smoking or is overweight. Incomes of 40% or higher could be offered with an impaired annuity for serious conditions such as such as diabetes, heart conditions or cancer.

Spainish debts may never be repaid

Spain's crisis has been compounded with recent data showing that their banks have debts of 155 billion euros that may never be repaid which exceeds the recently approved Eurozone bank loan. The actual amount the Spanish banks require will not be know until a report is published in September 2012. In addition the regions of Spain such as Valencia could need a bailout from Madrid and the government are setting-up an 18 billion euro fund for all regions. Equity markets are lower with Spain's Ibex index down 5.8% and other European markets down 1% to 2% with the FTSE-100 index lower by 62 points at 5,652 and the Dow Jones 121 points lower at 12,822.

After reaching a recent low of 5,266 on 23 May the FTSE-100 index had been around the 5,600 despite the volatility and negative news surrounding the UK economy and Eurozone. For pensioners that remain in equities and are retiring now to purchase their annuities they should consider converting the fund to cash to avoid a sudden fall in the value. It can take up to four weeks before their funds are transferred and a decrease in the pension fund would mean the pension income for the lifetime of the annuity will also be lower by the same decrease.

News related stories:
Impaired annuity rates react and fall to bailout for Spain
Annuities rates fall may reverse with Eurozone bank bailout deal
UK annuity rates fall as Eurozone fear spreads to markets and gilts
Retirement annuity income threat Greece euro exit
UK pension annuity income volatile with Spain's debt crisis
Related internet links:
Guardian - Euro slumps despite Spanish rescue
BBC - Eurozone deal fails to ease concerns
Guardian - Germany approves Spanish bank rescue
Annuity Rates
  Age Single Joint  
  55 £4,574 £4,142  
  60 £4,961 £4,610  
  65 £5,691 £5,238  
  70 £6,478 £6,098  
£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 rise due to inflation fears
Gilt yields rise over 2pc 15-year gilt yields are up 28 basis points as investors expect rise in base rates
Annuity rates soar 19pc to high for 6 years
Annuity rates soar19% Annuity rates reach a six year high up 19% since January 2021 as gilt yields rise
Gilt yields rise 20 basis points
Gilt yields rise 20 basis points Federal Reserve to raise rates more aggressively with gilt yields up to 1.82%
Annuities are at a 3 year high
Pension annuities could fall with Omicron variant Higher gilt yields sends annuities to a three year high up 11.1% in the last year
Pension annuities rise 9pc over a year
Pension annuities rise 9pc Pension annuities rise almost 9pc as yields increase ahead of higher base rates

  Follow Us:
You can follow the latest annuity updates on Twitter or as a fan on Facebook
  Facebook Page Twitter Page   This website is for marketing purposes only and does not provide specific financial or legal advice. Website security issued by GeoTrust and Equifax. Copyright©2001-22 All Rights Reserved