How does Gender affect Annuity Rates?
When it comes to retirement annuities, they are something that are often carefully calculated and considered, not only because they are a plan that you will be locked into for the rest of your life, but also because they are a big business. There are a whole range of factors that influence your annuity income including where you live, your health and your lifestyle factors – and one element that currently impacts your annuity income is your gender.
Why is my Gender important?
When it comes to annuities, although this legislation will change at the end of 2012, your gender currently affects your annuity income in the same way as any other factor. Annuities are based on a life expectancy – they work on the principle that they will provide you with an income for as long as you live and therefore if you have a higher life expectancy you will be provided with a lower income per year.
In general in the UK women have a higher life expectancy than men, which can be as great as a number of years in some locations and this can have a high impact on the annuity rates. In general, women will receive a lower annuity income against a man in the same position as they are expected to live longer.
How will recent rulings change this?
Rulings which are set to come into place at the end of 2012 will have a direct impact on this legislation and will help to bring a level of equality into the marketplace – annuity providers will no longer be able to tailor their rates with a differentiation between men and women.
In general, companies will no longer be able to take gender into account when they are generating an annuity rate – they will have to just use the traditional methods of health and location. This will help to bring annuity rates up for women who have traditionally received less due to their higher life expectancy.
Although this will have no impact on currently purchased annuity rates it could have an impact on annuity rates which are purchased in the future.