By Rob Starr, Content Manager, Big4.com
The EU Gender Directive will remove price differences between men and women on insurance products from 21st December 2012. PwC predicts male pensioners could see their annuity payouts cut by up to £10,000 over the lifetime of their policy as a result.
Several comments follow:
“While a small number of women will be better off from the ruling, eight out of ten annuities currently sold in the UK are bought by men, so many more people risk losing out than gaining. Women who are beneficiaries of joint life annuities purchased by their male partner will also be affected as they will end up with a lower income,” says Raj Mody, head of pensions consulting at PwC.
“With annuity rates under even more pressure, it is more vital than ever that people shop around for the best rate and do not simply accept the rate offered by their pension provider. The difference between the best and worst annuity rates in the market can easily be around 20% to 30%.”
Philippe Guijarro, life insurance partner, PwC said that to ensure price equality, insurers will need to disregard gender.
“The directive limits the ability of the insurance industry to fairly price the risk being taken on. Men will see their annuity payouts fall and women will see their life insurance premiums rise,” he said.