MSE News: EU ruling could cut male retirement income

cashbackproblems

Id rather Brussels making our laws than the Tories..

zagfles

Loughton_Monkey wrote: »

Here's the most interesting thing:

Imagine Male Annuity currently £8,000
Female annuity, same age currently £7,500

So presumably, they would be forced to quote Person Annuity: £7,750

Now if I were the male, and I wanted to make it 'joint life' 100% spouses pension, then I know that the quote (currently) would be <£7,500 (but not much less). Presumably, under the new 'law', they would find it difficult to justify a Joint annuity rate at anything less than £7,750? If they did, they would be 'rating on sex' again!

No they wouldn't - a 'joint life' 100% spouses pension means they carry on paying out till 2 people die, not one person, not the average of the 2 people, so the rate is bound to be lower. It doesn't matter what sex the two people are!

Loughton_Monkey

zagfles wrote: »

No they wouldn't - a 'joint life' 100% spouses pension means they carry on paying out till 2 people die, not one person, not the average of the 2 people, so the rate is bound to be lower. It doesn't matter what sex the two people are!

Yes, I understand that. But current 'joint life' annuities take that into account too.

I'll put it another way.

Current status: Statistical probability of Male dying=high. Of Female dying=Low. Of 'Person' Dying=medium.

Therefore joint life annuity calculates probability of both a 'high' and 'low' probability together. In future, they must calculate the probability of two 'medium' people dying. That would produce a different result wouldn't it?

zagfles

Loughton_Monkey wrote: »

Yes, I understand that. But current 'joint life' annuities take that into account too.

I'll put it another way.

Current status: Statistical probability of Male dying=high. Of Female dying=Low. Of 'Person' Dying=medium.

Therefore joint life annuity calculates probability of both a 'high' and 'low' probability together. In future, they must calculate the probability of two 'medium' people dying. That would produce a different result wouldn't it?

Yes, it would produce a different result, but a joint annuity would always be less than a single annuity, you seemed to imply they'd have to be the same.

They wouldn't necessarily have to calculate the probability of two medium people dying, they could calculate a 'couple life expectancy' based on the average length of time they have to pay out for a couple of a particular age. But without reference to sex, eg they'd have to pay the same for a lesbian couple as a gay male couple...

dunstonh

The annuity providers are starting to react. Some are now refusing to issue any guarantees on their figures. Typically you would get 14-30 days guarantee of annuity rate to allow you to sort the paperwork out. However, that is now being removed with some (and rest expected to follow) pending the announcement. It looks like the insurers are not confident that this daft rule is going to fail.

Loughton_Monkey

zagfles wrote: »

Yes, it would produce a different result, but a joint annuity would always be less than a single annuity, you seemed to imply they'd have to be the same.

They wouldn't necessarily have to calculate the probability of two medium people dying, they could calculate a 'couple life expectancy' based on the average length of time they have to pay out for a couple of a particular age. But without reference to sex, eg they'd have to pay the same for a lesbian couple as a gay male couple...

Still missing my point, I think. I fully appreciate that any joint annuity 'costs' more than a single annuity.

Let me put it a different way.

Today: Male age 70, female age 55. Annuity? Let's say £7000
But Female age 70, male age 55. Annuity? Don't know, but it has to be more doesn't it? Call it £7,200.

After Change: This difference would be illegal. They can only work it out on a 70 year old person and a 55 year old person. So they have to quote £7,100.

Since in the real world, the man is very usually the older party, and the one buying the joint annuity. Hence, it should be 'better', even though a person of each sex is involved.

So now you're going to say that they would notice this and 'adjust' the joint rate to reflect that 90% of the buyers had the female as the younger one. But this would still be 'rating on sex'. Illegal!

zagfles

Loughton_Monkey wrote: »

Still missing my point, I think. I fully appreciate that any joint annuity 'costs' more than a single annuity.

Let me put it a different way.

Today: Male age 70, female age 55. Annuity? Let's say £7000
But Female age 70, male age 55. Annuity? Don't know, but it has to be more doesn't it? Call it £7,200.

After Change: This difference would be illegal. They can only work it out on a 70 year old person and a 55 year old person. So they have to quote £7,100.

Since in the real world, the man is very usually the older party, and the one buying the joint annuity. Hence, it should be 'better', even though a person of each sex is involved.

So now you're going to say that they would notice this and 'adjust' the joint rate to reflect that 90% of the buyers had the female as the younger one. But this would still be 'rating on sex'. Illegal!

Why couldn't they do as I wrote in my previous reply "They wouldn't necessarily have to calculate the probability of two medium people dying, they could calculate a 'couple life expectancy' based on the average length of time they have to pay out for a couple of a particular age.".

So forget male/female/person, think couple and use accurate stats which say "a couple aged 70/55 tend to survive (last survivor) 30 years".

No reference to sex at all.

lseagle

It makes sense for men to purchase joint life annuities (i.e. with a 100% dependants pension) if this goes through, whereas women will be better off with a single life annuity.

Of course this selection risk will probably be accounted for by insurance companies.