The proposed changes to the way annuities are sold in the UK could see rates fall by as much as 13% for men overnight. That’s the warning being given by some industry observers, who are fairly certain that the ruling on 1st March by the European Court of Justice will force annuity providers to give equal rates to men and women. At the moment, women are on average offered lower rates as they are statistically more likely to live longer than men. Gender has long played a part in how insurance companies underwrite policies, including for annuities. However, should the ruling outlaw this practice, it could mean that male rates take a drastic and immediate fall. At a time when rates are low anyway, this will come as a further blow to savers looking to secure the best possible retirement income.
Billy Burrows from Burrows & Cummins said that…”…the idea of gender equality might seem like a step forward, but in reality is different. Many women are beneficiaries in their husband’s pensions – they will see their incomes cut, too. Only single women would benefit from the new rules.”
Tom McPhail from Hargreaves Lansdown warned that the changes could come in overnight and that rates could fall by as much as 13%. Moreover, he also noted that rates could fall close to current female rates, rather than half way in between. This would mean women seeing very little improvement in the rates they are offered and men being a lot worse off. Also as 80% of annuities are bought by men to support themselves and their partner/wife if they have one, overall many women would in fact be WORSE off as a result of these changes, especially those who would benefit in the future from a joint-life annuity. It seems only single women who buy annuities will benefit at all.
If you are a man about to buy an annuity, experts are advising that you should act now to avoid losing out on additional income.