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EU Gender Directive hits Pension Annuities

On the 21st December an EU ruling was passed meaning that there would be equality across the board when dealing with gender and pricing for insurance products. The implications of this were that many women have lost out, or will lose out, when it comes to renewing insurance products.

Insurers are no longer allowed to charge men and women different rates for their products, and this has had an effect on pension annuities too, according to Moneyfacts. Women will now be able to secure a pension annuity rate around 3pc higher than previously, while the amount men can receive will be 2.7pc less before the Gender Directive.

Annuities pay out a regular income to retirees upon their retirement in return for a lump sum which is collated over someone’s working life. Typically a 65 year old man with a lump sum of £50,000 will receive just £2,617 per annum, some £73 less than before the directive, while women will now receive a boost of £75 to their annuity payouts.

This is certainly bad news for men, and comes just after the revelations that male pension annuity rates took the largest plunge in fourteen years.

Head of pensions at Moneyfacts, Richard Eagling, said: “Sadly, it is fair to say that 2012 has proved to be another poor year for annuity rates”. He explained how factors such as record low gilt yields sparked by Quantitative Easing, and uncertainty over the Eurozone, coupled with the switch to gender neutral pricing has led to a high volume of annuity repricing amongst annuity providers throughout 2012.

He added: “The result of this activity has been a fifth consecutive year in which average annuity income has fallen”

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