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£220Bn gilt spree to bring volatility for annuities

The Government’s issue of £220bn in extra gilts could lead to volatility in annuity rates for some time to come, says annuity provider LV=.

Head of annuities Matt Trott says the price of gilts fell in response to the Budget move. He says gilt yields could rise, which could lead to an improvement in annuity rates, depending on the relationship between the Government and the Bank of England.

Trott says: “The Bank of England is using quantitative easing to buy up gilts and, because there will be two different departments doing different things, I think we will see volatility in the annuity market for some time.

“It will depend on how the Government and Bank of England talk to each other across the Square Mile and how the new gilts that are issued match the gilts that the Bank of England is buying.”

Smith & Williamson director Mike Fosberry says: “There are two schools of thought, the deflationary school or inflationary school. I sit in the inflationary school. If the Govern- ment has issued extra gilts as part of quantitative easing, the issuance of further gilts is part of this process and will ultimately lead to higher inflation. Longer-term gilts will rise, so annuity rates will rise, subject to whether people will live longer.”


Zurich makes group risk debut

Zurich Corporate Risk has made its debut in the group risk market and aims to be a top five player in the group risk market by 2012.

Colombia requests IMF credit line

Colombia has become the third country to request a credit line from the International Monetary Fund (IMF) under the Flexible Credit Line (FCL) facility, asking for $10.4 billion (£7.14 billion), according to the fund.Mexico has received approval for a $47 billion credit line, while the IMF is considering an application from Poland for a $20.5 […]

Stop the cold-calling

Royal London is pleased to support the petition calling for a ban on cold-calling for pension and investment products. The petition, launched by IFA Darren Cooke of Red Circle Financial Planning and hosted on the Parliamentary website, calls on the Government to ban cold-calling for pensions and investment products. A similar ban is already in force […]


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