Around six out of 10 IFAs are concerned about advising female clients to buy lifetime annuities ahead of the introduction of the European Court of Justice gender equality ruling, according to research from Primetime Retirement.
IFAs believe uncertainty over future pricing makes it difficult to advise on conventional annuities amid claims that rates for men could fall by as much as 13 per cent after so-called G-Day on 21 December.
Advisers themselves are expecting male rates to fall – 44 per cent expect rates to be levelled down while nearly 50 per cent expect providers to find a mid-point between male and female rates. An optimistic three per cent expect providers to level rates up.
Fixed-term annuity pioneer Primetime Retirement is concerned that the uncertainty over rates is complicating decisions for people heading for retirement.
Its analysis shows the average lifetime annuity rate offered by the top five providers for a male aged 65 investing GBP100,000 (with a five year guarantee) is currently GBP5,474 per annum whereas the maximum GAD income for the same client and investment is GBP5,500 per annum.
Primetime Retirement can currently offer the same client an income of GBP7,704 per annum (subject to GAD). Matching the income from the average of the top five LTA providers with a Primetime Retirement Plan over five years would give the client a maturity lump sum of GBP82,212.
Primetime Retirement chief executive Kim Lerche-Thomsen says: “Lifetime annuity rates are already at an all-time low and uncertainty over gender quality is adding to the difficulty for advisers and clients in making a decision.
“Low conventional annuity rates and the likelihood of rates dropping further due to the ECJ ruling underline the need for those who are in good health and still working to keep their options open in retirement with retirement income solutions which are flexible enough to adapt.”
Primetime Retirement’s research shows that IFAs have some sympathy for annuity providers – 41 per cent of them believe providers have not been slow in responding while 36 per cent believe think they should have reacted more quickly. Around 22 per cent do not know what providers should have done.
The Primetime Retirement Plan is a deposit-based investment which offers advisers and clients a combination of a fixed income for either five or six years which is not affected by age or gender; and a Protected Maturity Amount at the end of the term which they can use to purchase another appropriate pension product. It also offers Value Protection Plus death benefit, a valuable lump sum benefit for those looking to pass on as much of their fund as possible should they die prematurely.
For those clients looking to boost the potential purchasing power of their maturity fund, Primetime Retirement also offers a variety of investment upside alternatives to their core plan, using a structured deposit that links an additional maturity lump sum to the performance of the FTSE 100 Share Index. Clients can choose among the Accumulation+ plan aimed at those who are still saving for retirement; the Capital+ Plan for those seeking income and potentially higher growth; and Income+ for those looking for higher income.
