This ruling will affect new annuities being put into payment from 21st December 2012. An annuity is set up at the point of retirement in order to convert pension benefits into a regular retirement income.
How will it affect annuities?
Men, on average, do not live as long as women. As a result of this shorter life expectancy, they have traditionally benefitted from better annuity rates than women, giving them a bigger income in retirement for the same retirement cash fund.
From 21st December 2012, annuities must be calculated on gender neutral rates. This means your gender cannot be taken into consideration when calculating annuity income.
In general, annuity rates are likely to fall for men but could improve for women. This means men could get a lower annuity income and women could get a higher annuity income.
It is important to note, however, that if your CIS pension policy includes either Guaranteed Annuity Rates or other guarantees, these will not be affected as these guarantees are a historical right under your policy.
Existing annuities in payment will not be affected.
How will this affect me?
Gender is only one of a number of factors that we (and our panel of annuity providers) use to price annuities. Annuity rates are also determined by general economic circumstances, which have been very volatile over the last 12-18 months.
We cannot therefore predict in advance how these changes will affect you. Annuity rates will normally only be confirmed when you have selected how you wish to take your retirement benefits and returned an application to us.
Should I delay or bring forward my retirement?
We cannot advise you on this. Your gender is only one factor used in determining your retirement income, and changes in economic circumstances could have a much bigger effect on annuity rates than these changes. So if you defer or bring forward your retirement, it might not result in the change to your retirement income that you are expecting.
Please remember, if your CIS pension policy includes either Guaranteed Annuity Rates or other guarantees, these will not be affected, as these guarantees are a historical right under the policy.
However, if you do decide to bring forward your retirement, you may lose the right to the higher level of pension income that your Guaranteed Annuity Rate could provide.
Where can I get more information?
If you are already taking financial advice, you should speak to your financial adviser who will be able to give you more information. Alternatively, if you require advice on taking your pension benefits but don't have a financial adviser, you can find one near to you by visiting http://www.unbiased.co.uk/.
For free impartial information and guidance on all pension matters you can also phone The Pensions Advisory Service on 0845 601 2923^.
