Gender-Neutral Annuities: Not So Simple after All Say My Pension Expert

Share Article

Annuity rates won't be so gender neutral if retirees have medical problems.

My Pension Expert
It is advisable that men may want to purchase annuity before December, in order to not be affected by the potentially lower rate

The introduction of gender-neutral annuities is due to come into force on 21st December 2012 and even though it appears simple to offer everybody a fair and equal annuity rate, there are a few more complexities than meets the eye.

Instead of having a range of rates for both sexes, rates will now have to be gender-neutral and this could potentially raise rates for women and lower them for men.

It is advisable that men may want to purchase annuity before December, in order to not be affected by the potentially lower rate. Even though it is assumed this new ruling covers every aspect of annuities, it does not. Standard annuities purchased by people in occupational pension schemes will not be affected.

While standard annuities will have some minor changes, enhanced annuities may be less affected due to the amount of factors that are currently taken into account when selecting an enhanced annuity.

Already these annuities consider health, lifestyle, geographical location and occupation, therefore adding gender to the consider may not see as much movement as the standard annuities.

Even though annuities are affected, income drawdown will be affected more so due to the multitude of tables that will clash with the new ruling.

HM Revenue & Customs will need to give providers new GAD tables in order to fall in line with the ruling and in ample time. As GAD rates are dependent on annuity rates and the prognosis of will be uncertain after the new ruling, it will be several months before rates settle, therefore HMRC intend to wait to see how rates react and will then consider how best to manage drawdown and whether funds need to be set aside.

As several things are due to change when the new ruling comes in, it is essential to tread carefully in order not to cause an income drop, despite several rates rising.

My Pension Expert is a company of Diploma Qualified Independent Financial Advisors who specialise in the at retirement market.

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Samantha Green
Follow us on
Visit website