Canada Life was the third UK annuity provider to slash rates last week, after 10-year treasury gilt yields tumbled to below 1 per cent in the wake of the Brexit vote.
A spokesperson for Canada Life confirmed the life company had cut annuity rates by around 2 to 3 per cent on Friday (1 July).
The provider followed Legal & General, which cut its annuity rates by around 2 per cent on Wednesday, and Standard Life, which slashed rates by 4 per cent on Thursday (30 June).
The decisions followed a dramatic fall in gilt yields on Monday (27 June), after Standard & Poor’s stripped the UK government of its AAA credit rating.
This afternoon (1 July), 10-year gilt yields were at 0.85 per cent, with five-year yields at 0.36 per cent, and two-year yields at 0.15 per cent.
Canada Life’s decision also followed a downbeat statement from Bank of England governor Mark Carney, in which he signalled there would be a base rate cut over the summer, in order to mitigate the likely economic shock resulting from the UK population’s decision to leave the EU.
james.fernyhough@ft.com
