HMRC Guidance Requires Gender Neutral Drawdown Rates
28 January, 2013
Historically women have received a lower level of income from their pension plans than men of equivalent age, pension fund size and circumstances. This was to reflect the fact that women on average live longer so their pensions will generally be paid for a longer period of time.
However, since 21 December 2012 this has changed as a result of a European Court of Justice (ECJ) judgement which ruled that insurance companies in the EU could no longer use different rates for men and woman for all insurance products (including annuities) on the basis of gender alone.
For those who are in UK capped drawdown pension schemes (like a UK Self Invested Personal Pension) the annual pension which you can draw each year is calculated on the basis of an equivalent annuity which you could have purchased.
The UK’s HMRC has issued guidance confirming that until it becomes clearer how annuity providers will apply the ECJ judgement in practice, the maximum drawdown pension for both men and women aged 23 or over should be calculated using the higher male rates from 21 December 2012. This means that from this date:
- Women will be able to take a higher drawdown pension income than before; and
- Men will see no change in the maximum drawdown pension they can receive.