HM Revenue & Customs has told pension providers to offer women the same, higher maximum drawdown rate as men from 21 December.
The announcement means providers will need to use male GAD rates to calculate the maximum pension a woman in drawdown can take each year.
This follows a ruling by the European Court of Justice in March last year banning providers from using gender as a risk factor when offering insurance products.
The ruling, based on a challenge by Belgian consumer group Test-Achats, followed advocate general Juliane Kokott’s view that using gender as a risk factor when pricing insurance is discriminatory.
The decision will affect the way insurers price annuities, life insurance, income protection and critical-illness cover.
In a statement issued yesterday, HMRC says: “Until it becomes clearer how annuity providers will apply the judgement in practice, the maximum drawdown pension for both men and women aged 23 and over should be calculated using the higher male rates from 21 December 2012.
“The change being announced means that from 21 December 2012 women will be able to take a higher drawdown pension income than before. Men will see no change in the maximum drawdown pension they can receive.”
MGM Advantage pensions technical director Andrew Tully says the decision means a 60 year old woman will be able to take around 4 per cent more income through drawdown, while a 75 year old woman will see their maximum income increase by around 8 per cent.