Canada Life has become the first provider to stop offering a guarantee period for annuity quotes due to the uncertainty surrounding the European Court of Justice ruling on gender discrimination in annuity pricing.
The ECJ’s final decision, due on March 1, follows an opinion statement from advocate general Dr Juliane Kokott questioning whether the use of gender as a risk factor to rate policies is compatible with European human rights on gender discrimination.
Canada Life managing dir-ector of individual business John Occleshaw says it is pul-ling its 14-day guarantee from February 25 because of fears that from March 1 it could be illegal to set up annuities that have been priced on a gender basis.
He says: “We think there is a strong possibility that the ECJ will say you cannot use gender to price annuities and it is effective immediately. If we did have quotes running with guarantee periods after March 1, we would be in a very difficult position because we would have quotes that are guaranteed to our customers but we would not be allowed to set up annuities on that basis by law.”
Prudential, Aviva and Legal & General have refused to comment on whether they will pull their quote guarantees alth-ough L&G now includes a note about the ruling in its annuity quotes. LV= and Just Retirement say they will continue to offer guarantees while Aegon says it “does not expect” to change the terms of its quote guarantee.
LV= head of annuities Matt Trott says: “It was always an option to stop offering quote guarantees but I was not in favour of that because custom-ers want to know with as much certainty as they can what income they are going to get. There are investment uncertainties in the market as well and I do not see the ruling as any different than that.”
Hargreaves Lansdown pensions analyst Laith Khalaf says: “The problem for those who continue to offer guarantees is, if the ruling goes as expected and gender-specific annuity pricing is abolished on March 1, they may not be permitted to uphold those guarantees.”
An ABI spokeswoman says the decision on whether to continue offering quote guarantees is a matter for individual providers.