Pension experts have branded the European Court of Justice gender ruling a “seismic event” that is set to reshape the retirement landscape.
The ECJ published its ruling today in the test case brought by Test-Achats, who claimed it was gender discrimination to charge men and women differently for products such as annuities and life insurance.
After an opinion statement in September by advocate general Juliane Kokott, the final ruling has confirmed that gender cannot be used as a basis for calculating premiums with effect from December 21, 2012.
Hargreaves Lansdown head of pensions research Tom McPhail says: “This ruling is a seismic event which will fundamentally reshape the retirement landscape. It is now imperative that every investor shops around with their pension fund at retirement; if they do not they risk ending up with a homogenised standard–issue annuity which is almost certain to be a poor deal for them.
“We will monitor the reaction of insurance companies and issue further information regarding annuity rate movements as it becomes available.”
Lifesearch senior policy adviser Matt Morris says: “This is a horrible mistake by the European Court. It is essential for insurers to use gender to calculate risk based on solid actuarial evidence and statistics. It is price differentiation, not discrimination, as it is not a decision that comes down to the whim of an individual.
“The consumer will now suffer. Prices will go up across the board as insurance companies try to build in the new risk. Women currently pay less than men for life insurance, but pay more for income protection.
“It is very unlikely premiums will meet in the middle because there will be huge costs to the industry of repricing and updating their systems so everyone will end up paying the higher rate. Everyone loses.”