Annuity Update – 27th April 2011
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Whilst we have been enjoying the Easter sunshine, the yields on government gilt yields have fallen significantly
Whilst we have been enjoying the Easter sunshine, the yields on government gilt yields have fallen significantly. At the beginning of April the yield on 15 years gilts was 4.15% but today it has fallen to 3.88%, a fall of 22 basis points. Annuity rates are priced in relation to the yields on long dated gilts and corporate bonds, so a fall in yields may result in a cut in annuity rates.
However the good news is that annuity rates have held firm but when annuity companies review their rates after the May Bank holiday they may decide to cut their rates unless yields bounce back.
*Male age 65, Female 60, £100,000 purchase, joint life 2/3rds, guaranteed 5 years and level payments