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LEEDS, ENGLAND, December 30, 2012 /24-7PressRelease/ -- On Friday 21st December, new gender equality rules came into force regarding the calculation of insurance premiums and pension annuity rates. The new rules mean that gender can no longer be taken into account when insurance premiums and annuities are calculated.
Previously, women have paid - on average - lower insurance premiums as statistics show they have fewer car accidents and make fewer insurance claims than men. Women also live longer - on average - so while they have paid less on health and life insurance, they have also received a lower annuity rate as payments will generally need to be made for more years than for men. Annuities are determined by the rate set at retirement, and are paid out every year from retirement age.
However, a ruling by the European Court of Justice found that gender discrimination in the calculation of rates fell foul of EU gender equality rules, and that men and women should receive the same rates.
Last week, the Telegraph reported that: "Annuity rates [fell] by 9% in the past three months."
Alan Higham, the chairman of Annuity Direct, said: "we have seen insurers change their rates very often in the past few weeks. ... My impression is that those changes are to get the most business at the lowest rate."
Billy Burrows of Better Retirement Group agreed, adding: "Annuity companies knew they were going to get a rush of business from people looking to beat the deadline, so they cut rates to avoid being swamped."
Gregor Watt reported in Money Marketing this week that: "The European Court of Justice ban on using gender in underwriting could have far-reaching effects on annuities and other products," including an increase of up to 20% on life insurance for women, a 10% fall in life cover for men and an 8% decrease in annuity rate for men that could represent a "substantial" fall in retirement income, which would disproportionately affect those on lower incomes.
It remains to be seen what the long term effects of the new ruling will be on annuity rates and insurance premiums, but experts are predicting both rises and falls as companies alter rates according to what their competitors are doing or to gain an advantage in the market.
Customers are advised to shop around for the best deals and to seek independent financial advice before committing to any financial products. More information about annuities, including a rates calculator, is available on The Retirement Centre website at: http://theretirementcentre.com/product/annuities
The Retirement Centre is an independent company, designed to help people aged over 50 to make the right financial decisions and enjoy their retirement. To compare annuity rates and find the best deal for your annuity, visit The Retirement Centre website: http://theretirementcentre.com/product/annuities
For more information, call Dominic Fraser-Smith on 0113 320 5595 or email firstname.lastname@example.org
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