Member Article

EU ruling on insurance boosts female annuity rates

Annuity rates are on the rise for women nearing retirement age, according to research from Moneyfacts.

The financial advice site found that women can expect an uplift in the amount they receive from financial products that provide an annual retirement income.

A European ruling that says insurance firms cannot discriminate on price between female and male policyholders came into play on 21st December, meaning that women who pay before this date could receive a lower income than their male equivalents.

Women paying after this date, however, will benefit from EU changes known as “gender neutralisation”, which demand that insurance charges are the same regardless of sex.

Moneyfacts said the average annual income payable for a £50,000 standard level without a guarantee annuity for women over 65-years old has gone up 2.9% from £2,542 to £2,617.

The advisor added that for a range of ages and financial product types, women could receive improved rates between 2.8% and 6.8%.

Male customers, however, will suffer from a drop in the amount of income they receive as a result of an annuity drop from £2,690 to £2,617 for men over 65-years old.

This figure could range between a 1.8% and 2.7% decrease, suggesting the European Court’s decision could in fact have an immediate negative effect on the male-female balance.

Richard Eagling, editor of Investment Life & Pensions Moneyfacts said: “The fall in male annuity rates means it is more important than ever that men shop around and approach different providers to find the best annuity rate available to them,”

“Obviously, women find themselves in a better position than before, but they should still also shop around as considerable differences can be apparent in the amount of income available from different insurers.”

This was posted in Bdaily's Members' News section by Miranda Dobson .