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. Some comments from partners follow:
“To ensure price equality, insurers will now 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,” says Philippe Guijarro, life insurance partner, PwC. “The key question for insurers and consumers alike, is where will the directive lead the industry next?”
£10,000 headline figure is calculated using ABI’s ‘decrease for male annuitants’ expectations, price comparison data on ‘male annual annuity payments’ based on a £100k premium size, National Statistics’ ‘number of years expected to live’ and ‘allowance for future investment returns.
Raj Mody, head of pensions consulting at PwC also commented:
“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. ”