Men's annuity incomes 'to fall by £10,000'

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Men will lose £10,000 in pension income over the course of their retirement as a result of "unisex" annuity rates, a leading accountancy firm has warned.

Insurers will be forced to offer men and women the same annuity rates from Friday as a result of a European Court decision. Previously men got better rates because they tend to die earlier.

PricewaterhouseCoopers (PwC) calculated that "gender neutral" annuity rates would cause men's total retirement income to fall by up to £10,000. It based the figure on current annuity rates, the Association of British Insurers' predictions of the effects of the ban on sex-based pricing and official life expectancy figures.

Raj Mody, head of pensions consulting at PwC, said: "While a small number of women will be better off from the ruling, eight out of 10 annuities currently sold in the UK are bought by men, so many more people risk losing out than gaining.

"Women who are beneficiaries of 'joint life' annuities purchased by their male partner will also be affected as they will end up with a lower income."

He added: "With annuity rates under even more pressure, it is more vital than ever that people shop around for the best rate and do not simply accept the rate offered by their pension provider. The difference between the best and worst annuity rates in the market can easily be around 20pc to 30pc."

Some annuity providers have already announced their unisex rates. Prudential (LSE: PRU.L - news) said its new gender-neutral rate would be 1.5pc lower than the previous rate for men , while women would be offered 6.5pc more. The rates are for 65 year-olds.

Yesterday it emerged that annuity rates had fallen by almost 10pc in the approach to the ban on sex-based pricing. Experts said providers had reacted to the rush of male customers seeking to beat the deadline by making their rates less competitive.

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