Dunstan Thomas spots gender equality error in Joint Life Annuity calculations
30 October 2012
Dunstan Thomas, the retirement solutions specialist, has spotted an over sight linked to the rules relating to the calculation of a projected joint life annuity which places it in direct contravention to the European Court of Justice’s (ECJ) gender equality ruling. Gender equalisation comes into force for UK pensions in just two month’s time on the 21st December.
The Joint Life Annuity calculation is still based on the assumption that the male life is three years older than the female and vice versa so if the policy’s stated spouse is female she will be assumed to be three years younger than the male for the purposes of calculating the annuity.
So under this rule, stated in the FSA’s COBS (Conduct of Business) rule 3.1.4b in Chapter 13 Annexe 2, Contingent Spouses Pensions (CSPs) in the name of a female will be assumed to have a male spouse and will attract a higher annuity because of the assumption that the male has three years less to live and vice versa if the joint life annuity pension is in the male’s name.
Jamie Temple, Imago product owner, Dunstan Thomas explained:
“As we begin work to ensure compliance with the ECJ’s gender equalisation requirements in our clients’ SMPIs and KFIs we spotted this glaring error in CSP annuity calculations which seems to us to be out of step with the spirit and principle of the ECJ’s judgement.”