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Time is running out for higher male annuity rates
by
John T. Hughes
Under the European Directive on gender equality which comes into force later this year it will no longer be possible for annuity providers to offer separate rates for males and females.
An annuity is a regular income purchased on retirement with a lump sum, usually the result of a lifetime of contributions to a pension fund. Unless you are purchasing a fixed term annuity product, the annuity that you purchase when you retire will normally continue to pay out until the end of your life. Annuities are the most common route taken to turning a pension pot into a regular retirement income.
Currently annuity providers will often offer men a better annuity rate than women simply because men have a shorter average life expectancy than their female counterparts. From an annuity provider’s point of view this means that they are likely to have to pay out for a shorter period of time and they can therefore, generally speaking, afford to offer a men a higher rate life annuity.
From the 21st of December this year annuity providers will only be able to offer uni-sex rates. As a result annuity rates are likely to fall for men and climb slightly for women.
What should I do if I am considering buying an annuity in the next year?
If you are a man you may benefit from higher rates if you purchase an annuity before December 2012, but like so many things in the annuity market at the moment, this is far from certain because annuity rates are effected by a whole host of influences.
Typically the retirement income, also known as the “annuity rate”, that you are able to purchase with your pension fund is based on you age, the state of your health and the standard annuity rates across the market at the time that you make your purchase, as well as your gender under current rules. So although gender is likely to become an obsolete consideration come January 2013, annuity rates may still rise or fluctuate for other reasons.
While the European Directive on gender will mean that overall annuity rates are likely to drop for men they are also likely to rise slightly for women, so it’s not all bad news for those approaching retirement.
Nevertheless, an impact on annuity rates, however small can be keenly felt in today’s tough market, and purchasing an annuity may be one of the most important decisions that you make in later so it’s vitally important to consider all your options carefully before you proceed. Shopping around and comparing the market can help you get the most competitive deal for your circumstances.
John T Hughes writes for
Annuity Rates UK
, a site that connects consumers to
annuity advice
they can trust.
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Time is running out for higher male annuity rates