These also feed through to many financial products – for example, rising gilt yields should lead to rising annuity rates, which dictate how much income someone will get from their accumulated pension pot.
When yields are rising, annuity rates should rise too, says investment and pension firm Hargreaves Lansdown but, it adds, there is no guarantee that annuity rates will respond immediately or proportionately, as the link between the two is far from perfect.
However, non-financial wealth most notably housing tends to rise while annuity payments remain flat.
First, the value of notional accounts responds automatically to rising longevity: the annuities that pensioners receive depend on their life expectancy at retirement.
Today a 65-year-old man with around £30,000 could buy an annuity paying out an average rate of 6%, or £1,800 a year, according to Annuity Direct, rising to £6,000 for a pot of £100,000.
The ABI says the income from women's annuities is likely to rise, but joint annuities, which pay out an income to the surviving spouse after the death of a husband or wife, will also be hit.
Indeed, if at some point we see long-term interest rates rise and therefore annuity rates rise, it's not inconceivable that annuities could one day return to their glory days".
But bear in mind that while rising yields might be good for annuity rates, they spell bad news for the pension funds of many people approaching retirement.
MetLife, the largest U.S. life insurer, on Tuesday said its quarterly earnings rose 25%, helped by rising premiums and growth in its annuity business.
But Andrew Kligerman, an analyst at Bear , Stearns said he expected Lincoln's life insurance sales to continue rising at about 15percentt a year and for annuity sales to do even better.
Golden American, a subsidiary of ING of the Netherlands, which saw its variable annuity sales rise 35percentt last year, charges an average of 2.53percentt for an annuity with the same 5percentt bonus.
