It is not just equity prices which have fallen as a result of the financial fallout of the global coronavirus epidemic, annuity rates have crashed as well. As a result annuity rates have fallen by 7% since the beginning of the year.
Falling gilt yields
Annuity rates are priced with reference to the yields on long term fixed interest investments such as gilts and corporate bonds.
The benchmark gilt yield (15 year gilt as quoted in the FT) has fallen through the floor. At the beginning of 2020 the benchmark gilt yield was just over 1% but recently it fell to 0.4% which is the lowest level since I started recording yields 20 years ago.
Gilt yields have fallen as direct result of the flight to quality as investors sell equities and buy secure gilts. As more people buy gilts the price rises but the yield falls.