Prudential will switch to gender-neutral annuity rates from 12 November, setting it apart from other providers who are amending terms and conditions so customers can access gender-specific quotes until 20 December.
In March 2011, the European Court of Justice ruled insurers cannot price products based on gender from 21 December this year. The move will force providers to radically alter the way they price annuities, life insurance and health insurance.
Both LV= and Partnership have confirmed they will honour gender-specific annuity quotes as long as they receive a completed and signed annuity application before midnight on 20 December.
The Pru has decided to stop quoting on a gender-specific basis almost six weeks ahead of the deadline. The provider will continue to accept applications on quotes obtained prior to 12 November until 13 December.
The provider’s 28-day quote guarantee period will still apply but annuity applications will need to be received before 12 November.
A spokeswoman says: “From experience we would normally expect a timeline of between three and six weeks from an adviser receiving a quote to the client purchasing an annuity and as we are expecting to see a significant spike in business in this period we have put in place realistic timescales to manage the expectations of advisers and their clients.
“It is important to remember, however, that it will not be in the best interests of all men to vest before this date. Advisers need to consider all factors before reaching this decision.”
LV= and Partnership’s respective approaches to the annuity guarantee period are slightly different. While Partnership will only honour gender-specific quotes if funds are received within its 27-day guarantee period, LV= will do so if funds are transferred after its 30-day guarantee period has expired. LV= says it will not apply a time limit to the transfer of funds.
LV= head of annuities Matt Trott says: “We have taken the view that we need to do whatever we can to give an advantage to our customers. In order to do that, for the majority of customers the solution is to offer gender-specific rates for as long as possible.”
Legal & General is taking the same approach as Partnership, although it has yet to decide whether or not to maintain its existing 18-day quote guarantee period.
L&G head of annuity product development Tim Gosden says: “We are saying that you have to get the application in by 20 December but the funds then have to be with us within the quote guarantee period.
“We have taken legal advice and our view is the funds have to be with us within the guarantee period in order to comply with the EU rules. We have not yet made a decision as to how long that guarantee period should be.”
Standard Life is adopting a stricter approach and requires funds to be transferred before 21 December in order to qualify for a gender-specific annuity rate.
Head of decumulation Alastair Black says: “Standard Life will be introducing gender neutral rates on its annuity and drawdown propositions following the switchover. Prior to this it is business as usual regarding the rates we offer.
“However customers who want to receive a gender-specific rate prior to the switchover will have to ensure their documentation and money is submitted in advanced of the deadline, otherwise their quote will reflect the new rulings.”
There have been a variety of estimates about the impact gender equalisation will have. Partnership says it is likely to see male rates drop by between 2 and 4 per cent.
Hargreaves Lansdown head of pensions research Tom McPhail says: “I am surprised the Pru has moved this early to gender-neutral pricing.
“But even with some companies accepting applications until 20 December, people approaching retirement need to start thinking seriously about whether they should be buying an annuity before then.”