Men have been warned against rushing into annuity purchases before new European rule changes banning gender-specific insurance contracts take effect later this month.
Typically men benefit from higher annuity rates than women because of their shorter life expectancy, but as of December 21, insurers won't be able to charge different prices for products according to the persons' gender.
However, Capita Employee Benefits today cautioned men over buying annuities before this date in an attempt to get a better deal. Robin Hames, head of marketing for the consultancy said this approach could work against some people.
'We're concerned that this simplistic "buy now while stocks last" message could be counter-productive and lead to poor decision-making by retiring men,' he said. 'The impact of the changes may not be as great as some are suggesting and there are a number of other factors to be considered when buying an annuity.'
Capita's analysis of current annuity costs shows that the new rules could worsen annuity rates by just 0.85% for a 65-year-old man. Purchasing a joint-life annuity with a younger spouse could actually lead to a 3.53% improvement in the annuity rate.
Hames highlighted the potential for retirees to purchase an enhanced annuity, where the price is based on personal information and EU Gender Directive will not have a significant impact.
He cited figures estimating that 60% of people could quality for this option, which could provide a 20% increase in retirement income.
'The December 21 deadline should not be the main factor for anybody making this decision. It's vital that people investigate all the options available to them, take advice where appropriate and do not rush into an annuity purchase they might regret later on,' he added.
