New annuities rules come into force
21 December 2012
Companies will no longer be able to use gender as a factor in calculating quotes for annuities, as a result of the introduction of new legislation banning this practice.
The EU Gender Directive comes into force today (December 21st) and some commentators have predicted it is going to result in a major fall in annuity rates for men.
However, it remains to be seen what the impact on annuity rates for women is going to be as a result of the introduction of the legislation.
Vice-president Viviane Reding, the EU's justice commissioner, said: "Gender equality is a fundamental right in the European Union and the Court of Justice made clear that this also applies to insurance pricing."
She added annuity providers have had more than 12 months to get ready for the change and prepare a new method of calculating the annuity rates they are going to offer to consumers.
"The European Commission has helped the industry to adapt during this period. The Commission will monitor how the industry will implements these new rules in practice," added Ms Reding.
Motor insurance, life insurance/annuities and private health insurance are all expected to be affected by the changes being outlined in the directive.
"The insurance industry is competitive and innovative. It should be in a position to make these adjustments and offer attractive unisex products to consumers without unjustified impact on the overall price level," said a statement from the European Commission.
Philippe Guijarro, life insurance partner for PwC, recently explained how the change should result in equality for men and women in the annuities industry.
However, the firm has predicted it is going to mean annuity rates for men drop by £10,000 and since eight out of ten of the people who buy annuities are males, it was noted by PwC that this legislation may result in a lot of men losing out.
Those who want to find out more about annuities and their options in their retirement can get in touch with the experts at Key Retirement Solutions for more details.
Posted by Tom Papworth