While this hasn’t happened in America, I thought it was interesting nonetheless. Prudential is closing the annuity gender gap in England, according to This is Money’s Stephen Womack. In his article, “Prudential is first insurer to close gender gap,” today is the day that Prudential will offer the same annuity rates to both men and women. The unisex pricing for new annuity products means that men and women will have the same lifetime income payments in retirement. Annuity rates and payments will now be based on age, health, and other factors. Gender was previously a large determining factor in annuity payouts and still is across the globe. In England, women typically receive four percent less than men because they have a longer life expectancy and will likely receive payments for a longer time period.
In order for rates to be same, Annuity Direct anticipates women’s rates increasing by one percent and men’s rates decreasing three percent. The reason that Prudential is making these changes is because of the European courts’ new gender rules. Starting December 21, all policies have to offer the same pricing to men and women. This obviously affects annuities, but also will affect life insurance, car insurance, and medical insurance. All of those industries base pricing on gender and will have to change their policies. These sweeping changes mean that women are likely to pay more for their car insurance and life insurance. Some men may see their rates go down on future quotes or purchases, but increases for women are the most likely way that insurers will meet the new law requirements.
The majority of providers are likely to keep their pricing and quotes the same until the law takes effect next month, but Prudential is getting ahead of the game. This will allow them to work out quirks in their new pricing system and deal with the increase in administrative work. November 30 is when Aviva will begin offering unisex rates and Canada Life will start December 5. LV=, Legal & General and some other insurers will continue offering different rates for different genders until the deadline of December 20. Men will soon find it more difficult to get the best annuity rates across Europe. Those looking to buy an annuity now should search for a company who isn’t making their changes for another month or so. I am curious if this sweeping gender change in Europe will swim across the pond and changes be made in America.
Written by Rachel Summit
Follow Rachel, aka Finance Mama, on Twitter https://twitter.com/#!/financemama