EU Changes Meant to Benefit Women Could Mean Less Money for them in Retirement

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New EU rules, meant to equalise differences between pensions for men and women could make women less wealthy in retirement.

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On 21st December 2012, a change in EU law will make it illegal to differentiate the cost of some financial products based on sex, this change will probably see Annuity costs rise for men living in the UK. Previously men got cheaper rates than women because, according to ONS (Office for national statistics), on average, men die before women. The EU has no effect on biology, so this change effectively means that from the end of the year, British men will subsidies the female half of the population in retirement.

As well as the ruling running contrary to basic actuarial principles, it could have unforeseen consequences for couples. Generally, and certainly historically, men have been the main breadwinners in a household. This means that for most retired households, the majority of the retirement income will come from an annuity bought by the man’s pension pot. Due to the rule change, this annuity will provide less income for him and so the whole household, come the end of 2012. This means that the rule could disadvantage women says Parsonage Financial Planning.

For those on the verge or in the process of retiring with annuity rates at an all-time low, one option may be to simply put off retirement with the hope that the overall situation could improve. That said improvements in annuity rates are looking further and further away day by day and many could find delaying retirement unpalatable if not impossible.

Whether retiring now or in the future this ruling provides a second blow for those who will rely on the income from an Annuity in retirement. It is more important than ever to seek professional advice to ensure that your annuity provides the most income possible for you and your family. Visit http://parsonagefinancial.co.uk/annuities for more details

About Parsonage

Parsonage Financial Planning are based in the northwest of England and provide high quality financial advice to private clients. Since 2008, Parsonage has delivered growth to their customers through trying times. Parsonage is one of the first Chartered Financial Planning firms in the UK who combine experience with in depth knowledge. For more information on Parsonage, please call 0161 928 2706 or visit http://parsonagefinancial.co.uk

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Flora Maudsley-Barton
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