Pension annuity rates for men likely to fall with European Court of Justice ruling

The Euopean Court of Justice (ECJ) ruled earlier in the week that insurers cannot charge different premiums to men and women because of their gender from December 2012. The ECJ said "Taking the gender of the insured individual into account as a risk factor in insurance contracts constitutes discrimination."

This means that women can no longer be charged lower car insurance premiums than men, and pension annuity rates will fall for men. Men could see an 8% reduction in annuity rates, but women could see a 6% rise and the cost of life assurance could increase by 20% for women but fall by 10% for men.

It seems another barmy European legislative decision given that women live longer than men, meaning that they receive a higher income  per year from their annuity than women with the same sized pension fund.  This means mens retirement income will fall dramatically come December 2012. Until recently, annuity rates have fallen dramatically in the age of low interest rates, this is another hammer blow for pension returns. A £ 100,000 annuity for a man aged 65 and a female aged 60 (joint life, 2/3rds widow’s pension and level payments) pays a gross income of £6,700 per year. This is the highest annuities have been since August 2004 when the same annuity was paying £6,500. Annuity levels fell as low as £5,921 in February 2006. This still means to have an income of £20,000 in retirement requires a pension pot of close to £300,000 and most in the U.K. will not have anything even close to that in private or company pensions.

How the European court can call differences in prices for men and women for their insurance is a breach of human rights is plain crazy. It is a fact that men and women live on average to different ages and have different risk profiles when it comes to things like driving. What next, I ask myself!!