Gender directive impact on male annuities 'not as bad as feared'
27 December 2012
Men considering the purchase of an annuity may have been concerned about how much the products could drop in value as a result of the EU Gender Directive.
But new research has shown the dip in annuity rates for men has not been as great as a lot of commentators had predicted ahead of the rule coming into force on December 21st.
According to a report by Money Mail, some insurers have dropped the annuity rates paid by men by only one per cent, which is a lot less of an impact than some forecasts had suggested.
Experts had claimed annuities for men could be set to drop by as much as ten per cent due to the EU Gender Directive, which stops insurers from using gender as a factor in the calculations of the rates they pay out to consumers.
However, some providers have already revealed annuity rates for men are going to be down by four per cent in the wake of the legislation, which makes it more important than ever to shop around for an annuity before making a final decision.
"The impact on joint life annuities - where payments continue to the pension-holder's spouse upon their death - is less pronounced," it was noted by the news provider, which cited the example of one firm that has reduced men's rates by just one per cent, increasing rates paid to females by a similar figure.
Traditionally, men have been given higher annuity rates because of the differences in life expectancy between the genders, but this will no longer be the case due to the directive.
Raj Mody, head of pensions consulting at PwC, recently claimed that only a "small amount" of women are going to benefit as a result of the rule change.
He urged people to shop around for an annuity before choosing a product, noting: "The difference between the best and worst annuity rates in the market can easily be around 20 per cent to 30 per cent."
Contact Key Retirement Solutions for more information on annuities.
Posted by Richard Planner