Annuities at record high even as gilt yields drift slightly lower to 4.55pc

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

Annuity Rates UK - November 2024 review

Annuities reach record high levels after the 15-year gilt yields peaked at 4.88% on 6 November the highest level this year before ending the month at 4.55% down -17 basis points.

Gilt yields are higher after the Labour Budget allows the Chancellor to access a further £50 billion per year in extra borrowing. This will be used for infrastructure investments such as transport, electricity networks and power generation schemes.

Providers increased annuity rates to record levels up +5% since September 2024 and +10% since the start of the year. This is due to expectations the Bank of England to keep interest rates higher for longer and gilt yields to remain at higher levels through 2025.

Find related news here:
Gilt yields at highest this year as Budget raises £50bn in extra debt
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Providers of standard annuities increased all annuity rates by an average of +1.25% this month and we would expect rates to fall by -2.95% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers increased all their rates by an average of +0.85% and we would expect rates to fall by -2.55% 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   82%   0%   18% Increases of: max 4.4%   Decreases of: max -2.0%

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