Gender-neutral rates for drawdown pensions
HM Revenue and Customs (HMRC) has updated its guidance about drawdown pensions. It tells providers to use the same rates for women as for men to determine their maximum drawdown pension from 21st December 2012.
Male rates are higher than the rates for women; this means that from 21st December 2012:
- women will be able to take a higher drawdown pension income than before;
- men will see no change in the maximum drawdown pension they can receive;
- drawdown providers can continue use the existing male rates, but for more of their customers.
On 1st March 2011 the European Court ruled that insurers could not use different premiums for men and women.
The government was disappointed with the judgement, which it expects to have a largely negative impact on consumers. The judgement is however binding in UK law and the government is legally required to implement it.
Until it becomes clearer how annuity providers will apply the judgement in practice, the maximum drawdown pension for both men and women aged 23 and over should be calculated using the higher male rates from 21st December 2012.
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