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

7 March 2017 last updated

Best annuity rates fall as investor seek safe havens sending yields lower

Best annuity rates reduced by 1.91% in February following political uncertainty in Europe, wage data in the US pointing to lower inflation and worries over President Trump's economic policies sending gilt yields to the lowest level for the year.

Gilts and bonds ended February lower as investors seek safe havens as European politics in France, Germany and Italy create uncertainty over future elections.

The 15-year gilt yields reduced 29 basis points from 1.79% to a low for the year of 1.50%. As a general rule a fall of 29 basis points would result in annuity rates reducing by 2.9% and providers have been actively reducing rates in February.

Standard annuities are lower by an average of 1.91% and could fall a further 0.99% in March. This ends a five month run of increasing annuity rates.

Smoker and enhanced annuities are down by a smaller amount of 0.44% for the month and could fall another 2.46% should yields remain at current levels or decrease further.

Best annuity rates fall
  Political uncertainty in Europe sends 15-year gilt yields lower and fall in best annuity rates
  More annuity topics
  Quarter 1 News 2017
  News & articles
  Archive news stories
  Flexi-access drawdown
  Annuity rates tables
  Outlook for 2022
  Annuity rates charts
  15-year gilt yields
  Latest annuity rates

Annuities may fall further in March

The sudden fall in gilt yields in February leaves room for providers to reduce rates across the board in March for both standard and enhanced rates.

Gilt yields and annuity rates
Fig 1: Chart comparing annuity rates and 15-year gilt yields

The above chart shows how our benchmark example reduced by 2.74% and has closely matched the 29 basis point fall in yields although the average fall for standard annuities is 1.91%. This means there is likely to be further falls in rates of about 0.99% to follow in March.

Our benchmark example for a person aged 65 with £100,000 buying a single life, level annuity would receive £5,394 pa in January falling by £148 pa to £5,246 in February.

Gilt yields reached an all time low in August last year of 0.98% following the EU referendum and our benchmark example was as low as £4,696 pa before recovering significantly towards the end of the year up almost 15% on average.

  Benchmark annuity rates and gilt yields
  Aug Sep Oct Nov Dec Jan Feb
Rate £4,696 £4,723 £4,925 £5,203 £5,322 £5,394 £5,246
Yield 0.98% 1.16% 1.61% 1.79% 1.62% 1.79% 1.50%

For the benchmark example in terms of lifetime income, the Office of National Statistics (ONS) would expect a male to live for 17.3 years and he will have £2,560 more over his lifetime. For a female she can expected to live for 20.4 years increasing her income by £3,019.

For smoker and enhanced annuities the fall was less on average at 0.44% suggesting a larger fall can be expected in March of up to 2.46% if yields remain at current levels or decrease further.

Political uncertainty to continue

Gilt yields and annuity rates increased after August as investors expected the Federal Reserve would increase interest rates before the end of the year with a Trump victory, improved economic outlook in Germany and rising crude oil prices pushing up inflation.

Since then ther has been greater political uncertainty and investors are moving funds to safe havens including buying gilts and bonds.

In Europe a referendum vote last year against the Italian Prime Minister Matteo Renzi to reform the constitution resulted with him leaving office.

This has been followed by the German elections later this year and polls showing German Chancellor Angela Merkel losing ground on the Social Democratic Party candidate.

In France polls show Marine Le Pen has been gaining ground ahead of their election and this highlights a risk for investors as she has championed pulling the country out of the European Union.

For the US disappointing wage growth data suggesting inflation would not rise at a level to see higher interest rates from the Federal Reserve until much later in the year. There was also uncertainty over the President Donald Trump's promised pro-growth policies including cuts to corporation tax and infrastructure spending with a lack of clarity presented by the administration.

Annuity rates are certain to fall further in March if gilt yields do not recover and with elections in Europe later in the year investors are likely to be cautious until the outcome is known.

News related stories:
Annuity income increases up to 18% in five months since all time low
Best annuities recover over 10% since the all time low after Brexit vote
Pension annuities up 7% as yields recover after election of Trump
Enhanced annuity rates up 2.4% as gilt yields recover from Brexit
Related internet links:
CBNC - Lower yields with euro zone risk focus
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