Confusion reigned in the Annuity market this week as one leading provider announced their unisex Annuity rates.
Up until now, Annuity providers have been able to offer men and women different Annuity rates, with men generally getting a better rate than women, due to their shorter life expectancy. However, from 21st December 2012 Annuity providers will have to offer the same Annuity rates to men as well as women.
Most industry experts, as well as the government, had thought the move to unisex Annuity rates would mean lower incomes for men, whilst Annuity rates for women were expected to rise slightly. However, this week’s announcement from the Prudential, as reported by the Telegraph newspaper, has cast doubt on this theory.
The Prudential’s new Annuity rates are thought to be the first issued by an Annuity provider on a unisex basis. Rather than significantly reducing rates for men, it appears that the Prudential has actually increase female Annuity rates.
The Telegraph reports that for a 65 year old the Prudential has increased female Annuity rates by around 6.5%, with only a small reduction of 1.5% for men. Larger reductions have been made for younger men, with a 60 year old suffering a fall of 2.5%, whilst a women of the same age would see her income rise by 4.5%.
Although they are generally uncompetitive, the new Prudential Annuity rates have surprised many industry experts; it will be interesting to see how other Annuity providers change their rates, in the weeks leading up to the implementation of the Gender Directive just before Christmas.
Prudential said: “Gender-neutral pricing will apply to all annuity quotations produced from November 12 onwards, as Prudential outlines its timetable for the introduction of the EU Gender Directive. Prudential is moving ahead of so-called ‘G-Day’ on December 21 in order to provide certainty and a definitive timeline for advisers and clients, so they can start considering their options now.”
Our team of Independent Financial Advisers in Nottingham are experienced in advising people nearing retirement. If you are approaching retirement, or are concerned about how the Gender Directive will affect you, call one of our IFAs today on 0115 933 8433, alternatively enquire online or email firstname.lastname@example.org