Annuity Update October 2024
Outlook for annuities
As expected, annuity rates have fallen slightly following the cut to UK interest rates.
12 months ago (October 2023) the income from the benchmark annuity was £6,531 and today (1st October 2024) it is £6224. This is a reduction of £300 per annum for a £100,000 annuity or just under 5%. Meanwhile, the yield on 15 year gilts fell from 4.8% to 4.3%, a fall of 50 basis points.
There is some symmetry here because, generally speaking, for every 100 basis points fall in yields, we can expect annuity rates to fall by 10%. Over the last year, yields have fallen by 50 basis points and annuities by 5%.
Looking ahead to the next year, and factoring in say two bank rate cuts we can expect annuities to continue the gentle path downwards.
The slow reduction in annuity incomes should not be something to worry unduly about because annuity rates do not fall in a vacuum and if interest rates fall this should be good for business and consumer confidence. This means that if pension fund values rise this will offset some of the reduction in annuity rates.
My opinion is always the same; when you decide it is the right time to arrange an annuity, get on with it because delaying an annuity purchase often results in lost income, especially if annuity rates are on a downward trajectory.
The chart below plots annuity rates over the past years.
https://www.williamburrows.com/calculators/annuity-chart/
See chart at
About the author
William Burrows
William has been involved with retirement options for nearly 30 years, advising clients on all aspects of annuities and retirement income options.
He is a regulated adviser with Eadon & Co He has have many years of practical experience in advising clients about all aspects of pension options at retirement and he is passionate about helping people make the right decisions about their pensions and retirement income.
William also publishes guides including the popular ‘You and Your Pension Pot’ and ‘The Retirement Journey’.
He is frequently quoted in the national press and appears on radio, podcasts and videos and writes extensively on retirement income matters.
Help and advice
William Burrows will be pleased to answer your questions