Some unintended consequences are looming in the pensions and
annuities market. As we have known for some time, the use of risk
assessment based on gender for insurance policies will be illegal from
21 December 2012. But the EU Commission has now said that ‘Some
insurance products, such as annuities, contribute to retirement income.
The directive however only covers insurance and pensions which are
private, voluntary and separate from the employment relationship,
employment and occupation being explicitly excluded from its scope.’
This has been justified on the legal nicety that the ruling only applies
to insurance contracts and therefore has no effect on occupational
pensions. The result will be yet another difference between how people
are treated in the private insurance market and in occupational pension
schemes. How sustainable is this for the future given the onward march
of anti-discrimination law?
In another part of the forest we have the changing annuities market based on disability risk assessment. In a way this is compatible with the ruling that criticised risk assessment based on gender as “lazy underwriting” when a more accurate means of assessment is available. Years ago this would have been an intellectual argument. Back in the 90s if you had really poor health and you purchased an annuity you would get the same return as if you were very healthy. From the individual’s perspective this seemed clearly unfair. But what of the healthy people? Should they get a lower payout because say they don’t smoke or drink to excess and are regular gym visitors etc. In practice, for a long time after the market changed to accept health underwriting, it made no difference as the healthy pool was not re-assessed.
Read more: http://samiconsulting.wordpress.com/2012/06/12/the-second-pensions-time-bomb/
In another part of the forest we have the changing annuities market based on disability risk assessment. In a way this is compatible with the ruling that criticised risk assessment based on gender as “lazy underwriting” when a more accurate means of assessment is available. Years ago this would have been an intellectual argument. Back in the 90s if you had really poor health and you purchased an annuity you would get the same return as if you were very healthy. From the individual’s perspective this seemed clearly unfair. But what of the healthy people? Should they get a lower payout because say they don’t smoke or drink to excess and are regular gym visitors etc. In practice, for a long time after the market changed to accept health underwriting, it made no difference as the healthy pool was not re-assessed.
Read more: http://samiconsulting.wordpress.com/2012/06/12/the-second-pensions-time-bomb/
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