Gilt yields fall as economic data indicates sluggish UK growth

15-year gilt yields chart - Based on figures for February 2025

Annuity Rates UK - February 2025 review

Annuity rates have increased this year and are at a sixteen year high following record high 15-year gilt yields.

Gilt yields initially increased to 4.97% with higher UK inflation increasing to 3.0% and reduced at the end of the month.

These changes in gilt yields were due to the Bank of England reducing interest rates by -0.25% to 4.50% in February and concerns about economic data indicating sluggish UK growth.

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Providers of standard annuities increased rates by an average of +0.14% this month and we would expect rates to fall by -0.54% in the short term if yields remain at current levels.

For smoker and enhanced annuity providers decreased their rates by an average of -0.71% and we would expect rates to rise by +0.31% 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   42%   12%   46% Increases of: max 1.2%   Decreases of: max -2.2%

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