Mortgages could replace annuity gilts, suggest actuaries

According to the Profession, the government is not issuing sufficient new stock to match the demand arising from annuity sales. Currently, most insurers back their annuity liabilities with a portfolio consisting of around 50% gilts and 50% UK corporate bonds. However, there are only five British government stocks left with maturity dates of 15 or more years. Reducing liquidity further, these stocks are also very popular with other investors such as pension funds. This has left their availability limited and their price high, the Actuarial Profession says. The lack of long-term gil...