Sex discrimination ruling on annuities is bad for consumers

Sex discrimination ruling on annuities is bad for consumers

01 March 2011 / by George Ladds

George Ladds, head of pensions at Fair Investment Company comments on the European Court's ruling that under sex discrimination laws, gender can no longer be used as a risk factor to calculate annuity rates and insurance premiums.

"The reality is that women live longer, this means they are drawing a pension for longer and as a result get lower annuity rates than men. It's not sexual discrimination, it's just a fact. And it works both ways – while men get better annuity rates, women get cheaper life insurance.

"But now that gender can no longer be used by insurance companies when calculating annuities, the whole industry will have to change.

"Either rates for men and women will be brought in line to create 'unisex' annuity rate, which, will probably see men's rates go down more than women's go up – or annuity providers will have to start looking at each  case individually, which is more expensive, and that cost will be passed onto the consumer.

"Either way, the consumer loses out on both choice and value. Annuity rates are already low, and this could be the excuse providers need to pull them even lower."