Standard Life urges govt to change pension rules before gender ban

The government must tackle the regulatory arbitrage created by the European Court of Justice’s (ECJ) ban on gender-based underwriting, Standard Life has said.

The ECJ ruled in March 2011 that insurers' use of gender to underwrite contracts was in breach of the EU Equal Treatment Directive, which bans the withholding of goods and services on the grounds of gender.

The ruling comes into effect on 21 December 2012, but only outlaws gender underwriting in individual or group pensions, not in occupational pensions, Standard Life said.

Occupational pensions must comply with the Equal Treatment in Employment and Occupation Directive.

When employees reach retirement age their annuity is not subject to the gender-pricing ban as the underwritten contract is between their employer and the insurer, not the individual.

John Lawson, head of pensions policy at Standard Life, said the government must ban the use of gender in underwriting occupational pensions as well or risk creating regulatory arbitrage.

He said after December insurers are likely to create unisex rates, which will be somewhere between men's higher rates and women's traditionally lower rates.

This situation would push men towards occupational pensions whereas women would end up in individual pensions, both in an attempt to get the best rates, Lawson said.

He added this would create more inequality in pension provision, rather than less as the legislation intended.