Well once again it’s time to note the fast approaching EU Gender Directive deadline – 21st December 2012.
Since we last covered this we’ve had a good response from clients in terms of reviewing their existing cover and in some cases getting cover in place which was always part of the overall financial plan but hadn’t been properly addressed.
There is certainly no time like the present to review your current cover or get cover in place if you have been thinking of doing so but just haven’t found the time. If you take out a policy now guaranteed gender specific rates will be available provided the policy is accepted before the 21st December 2012.
Our focus up to now has been on the life and critical illness considerations but this new ruling also has implications for pensions.
On retirement, most people will use all or some of their accumulated pension fund to purchase an annuity. This provides them with a guaranteed pension for life. The amount they receive depends on several factors, including how long they are likely to live.
From the EU Gender Deadline date of 21st December 2012, annuity providers will no longer be able to offer different pension rates for men and women. Traditionally, men have received a higher annual annuity income than women, due to their lower life expectancy. This will not be the case in future. The new Directive is likely to reduce the pension income of men retiring after 20 December this year.
It is estimated that male annuities will be reduced on average by 2% to 4%1 so if you’re male and are close to retirement, it is important you act now to secure your pension. Once the Directive comes into force, you could receive less income in retirement –a case of ‘use it or lose it’.
At a time of historically low annuity rates, it is essential that anyone close to retirement receives the maximum pension available – but annuities can vary widely, and many people find their current pension company may not offer the best deal.
If you are in this position then we can help you review your existing arrangements, search the entire market and recommend the most suitable annuity for you.
We’re pretty sure most pension companies will experience higher than usual levels of activity towards the end of the year as clients rush to get annuity funds released before the deadline, so by acting now, we can ensure you get the best available annuity rate in plenty of time.
If you would like more information on this or would appreciate a face to face discussion with an Adviser on how you may be affected by the deadline then please do not hesitate to get in touch.
You might also find it useful to visit the “Your Retirement Options” section on our home page as this also provides an extensive guide to retirement choices so even if you’re not likely to be affected by the Gender Directive but need to make some retirement decisions soon we can help.
Dr Claire Armstrong
Source: 1 Partnership: Figures are based on the general situation for male retirees at age 65. For enhancements due to lifestyle or ill health, the difference will depend on individual circumstances and could be higher or lower than these amounts.