Impact of directive on annuities 'hard to assess'
14 September 2012
A leading financial expert has stated it is difficult to assess the impact an upcoming European directive is going to have on annuity rates for people in the UK.
Speaking to the Independent, Tom McPhail, head of pensions research at Hargreaves Lansdown, stated it is not clear whether or not there is going to be a rise in rates for women over the course of the next few weeks and months.
The EU gender directive comes into force on December 21st and from then it will be illegal for a financial services company to use gender as one of the risk factors for a premium.
Mr McPhail said a man who is planning to buy an annuity in the coming months would be "crazy" to wait until the directive comes into play later in the year.
This is due to the fact that annuity rates for men are likely to drop as companies try to get to grips with the new rules that are being introduced across Europe this December.
But the situation for females considering the purchase of an annuity is less clear and Mr McPhail said: "For women the impact is harder to assess. There may in fact be no compensating uplift in rates, though they may rebound in time once insurers have found a new equilibrium."
Earlier in the month, the release of new data showed annuity rates hit an all-time low during August and Lisa Webster, senior technical consultant at Hornbuckle Mitchell, explained those who already have a guaranteed income of £20,000 a year, have more choice in the market at the present time.
Speaking to Investors Chronicle, she noted those who can meet the minimum income requirement are also likely to be in a stronger position than those who cannot.
Those who want to find out more about their options for retirement income and are considering buying an annuity in the coming months may find it useful to speak to an adviser from Key Retirement Solutions before they come to a final decision.
Posted by Claire Ford