With effect from the 21st December 2012 the rates used to calculate women’s pensions under capped drawdown will be brought in line with the rates used for men. This change was brought about as a result of a recent European Court of Justice ruling which found that insurance companies cannot base the price of pensions on the gender of a person.
Currently there are separate Government Actuary’s Department tables for men and for women and we use the appropriate one when calculating someone’s maximum pension under capped drawdown. However, from the 21st December we will have to use only the men’s tables for both men and women. The rates on the men’s tables are better than the rates on the women’s tables because men on average have a lower life expectancy than women. As a result, women will be better off following this change and men will be unaffected.
Any female clients who are already receiving a pension through capped drawdown or who begin drawdown before the 21st December will continue with their current maximum pension until their next pension review. At that date their review will be conducted using the men’s tables.
All of our SSAS and SIPP clients also have the right to request that their maximum capped drawdown pension is reviewed on any pension year end date. This would mean that our female clients might be better off if they request a review at their first pension anniversary following the change.
Any female clients who are considering taking their benefits and drawing an income through capped drawdown, may be better off if they wait until after the 21st December as we will then be able to use the new rates.
For further information about capped drawdown and how it is calculated, please visit the technical section of our website.