11 October 2010
The Advocate General of the European Court of Justice (ECJ) has
said that the practice of providing men with greater annuity
payments than women because they live shorter lives is wrong.
Alasdair Buchanan from the Royal London insurance company
said
"Women, on average, live three to four years longer than men and
this means that, when it comes to calculating how much annuity
income they are paid, men will receive more. If the
Advocate-General's proposal is adopted, and we will no longer be
able to price annuities according to sex, this could potentially be
much more damaging than an adjustment to car insurance
premiums,"
If the Advocate General's opinion is adopted by the ECJ it could
mean that annuity rates in the UK for men fall in line with those
of women.
Malcolm Tarling from the Association of British Insurers
stated:
"A 65-year-old man can expect to live another 17 years, compared
with another 20 for a woman. The average annual annuity payment on
a £100,000 pension fund would be £6,510 for a man and
£6,111 for a woman. So currently, for the same lump sum,
females will on average receive a lower amount per year, but over
more years. Females may gain from unisex pricing. However, this
increase would come at the cost of the majority of male annuitants
(and their dependants), who would see their annuity income fall to
subsidise the higher female benefits,"
The advisory opinion which has been sent to the ECJ has said
that life expectancy is influenced by many factors aside from
gender; such factors include economic and social conditions, drug
use and eating habits.
