The EU Gender Directive 2012 - How Will You Be Affected?

Published: Tue, 12/11/12

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Financial Tips

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Welcome to Financial Tips!

Published every 4 weeks by Rutherford Wilkinson Ltd,
written by Financial Planners Ray Prince and Graeme Urwin.

Approximate time to read: 6 minutes

In This Week's Issue:

Feature Article: The EU Gender Directive 2012 - How Will You Be Affected?
Hot Topics Q & A: Why Are Cash Deposit Rates Falling?
Wrap-Up (Graeme)

The EU Gender Directive 2012 - How Will You Be Affected?

Not exactly an exciting start to an article with a title like that, I'm sure you'll agree!

But this is about to be implemented by all insurance companies in December and will affect pretty much everyone with particular emphasis perhaps on females.

So what is it all about?

Well, back in 2007, the Gender Directive ruling allowed insurance companies to still discriminate between male and female rates as long as they could prove with statistics that there were good reasons for going so.

One of these could have been that, for example, amongst young drivers females have fewer accidents and therefore are rewarded with lower insurance premiums (the words 'boy racer' come to mind).

But the latest EU ruling has stated that this is no longer acceptable as it flies in the face of the spirit of the Gender Directive and that unisex rates must be brought in by 21st December 2012, as the Directive was clearly about eliminating different premiums for people of different sexes.

So that's that then.

So how will this affect things for us all?

Let's take a look at some of the most common issues:

Life Insurance

In the past, a female taking out life cover had lower premiums as they were overall a better risk for the insurance company due to the fact that, on average, they live longer than males.

This will now be ending, with equal rates for both men and women.

Income Protection

The opposite has been the case for females on this form of insurance cover, with premiums normally costing them more and sometimes a lot more.

This is because the actuaries have decades of statistics showing that not only do females claim more, but they tend to also claim for longer.

Again, the new ruling will now mean that both male and female rates will be equal. Although many providers have not finalised rates or at least let them be known yet, LV have been quoted as saying that they expect female premiums to drop by 28% but mens to increase by a similar amount.

A point worth making on both the above issues is that insurance companies have had huge costs (millions) in changing their systems due to the Directive.

Therefore, in the opinion of one provider, although there will be some clear winners with the changes overall premiums will increase.

Critical Illness Cover

Perhaps reflecting these increased costs for insurance companies, LV have said that they expect rises in premiums for both sexes, and critical illness with life cover could rise by 6% for men and 16% for women.

Annuity Rates

An annuity is what you purchase when you convert the amount of pension fund (usually in a private pension / Self Invested Personal Pension) you have accrued.

Annuites provide a level of income and can include various features, such as spouse benefit and inflation protection. Currently, the rates are different between the sexes.

Since females (on average) outlive males, they are only able to secure a lower annuity rate, meaning they get less annual pension for the same pot.

This will now change with the new unisex rates.

Prudential has stated that a male with a £50,000 pension pot, retiring at age 65 taking a level pension, will receive £2,506 a year now.

However, this will reduce to £2,467 under the new rules. A female in the same position will see her income increase from £2,277 to £2,467 - a gain of 8.3%.

Car Insurance

The biggest gainers will be young men, and the biggest losers young women, although it is not totally clear yet how exactly this will feed through into premium rates.

For drivers above age 30 it should make little difference.

The Financial Tips Bottom Line

Women are set to be clear winners with the amount they get for their pension pot and with new applications for income protection.

However, it looks like they will be losers on life and car insurance.

Action Point

If you are due to renew your car insurance (or your children are!) and are female, it is worth looking at urgently. Also, can you renew early?

On annuity rates, although the rates for males are not expected to drop too much, if you are due to take your pension this way it could be a good idea to move quickly. is in black.

Hot Topics Q&A: Why Are Cash Deposit Rates Falling?

Every week we receive questions from clients regarding all aspects of their financial planning. So, rather than keep the answers to ourselves (and clients) we publish one key topic each issue.

Q. As I am one of the 'risk averse', I keep a lot of my money in cash deposit accounts and constantly look for the best rates in the market.

Why is it that rates have dropped quite a bit recently? I used to simply use instant access accounts that gave me around 3% gross, but now struggle to get much above 2%.

A. You are quite right that rates have dropped over the last few months.

We attended a Seminar by a major investment house this week and they addressed this point as part of the whole economic position with the banks.

In simple terms it seems that since the 2008 financial crash, banks have been instructed to build their reserves up to higher levelsthan was the case previously.

So, from 2009 to fairly recently, they offered good rates of interest on their cash accounts so that they could attract our money which in turn helped build their reserves.

However, they have been very successful in attracting our cash and are now looking a lot healthier, being on target to achieve their requirements. As a consequence they do not need to offer such attractive rates on their cash deposit accounts as they do not need our money as much as they did.

You are doing the right thing by checking rates regularly, but it looks like for the foreseeable future rates will struggle to beat inflation, meaning real rates of return are negative.

It is perhaps worth you consulting an adviser to look at your overall situation to see if there are other areas you could invest in without taking on too much risk.

Please send us your questions! It's easy to do. Just send an email to us here (and if we publish it we'll make it anonymous).

Wrap-Up - Comedy, Mini Breaks & The Bruce

My family do enjoy getting away for a few days and with half term in mind we decided to go to Center Parcs in the Lake District. null

It was quite a surprise to find that on contacting CP a good while before we intended to go, they were almost full!

The only lodge of the size we wanted was at the very edge of the 500 acre forest, a good 20 minute walk from the main facilities. As it usually pours with rain in the lakes in November, we ideally wanted to be nearer the village centre.

We were very lucky however, as chatting to the CP lady on the phone she said they had had a cancellation and that a suitable lodge had come up just 5 minutes from the centre.

Result!

Now, it's true to say that these places are not cheap. But overall I would say they are good value if you get out and about and in particular use the amazing swimming pools, wave machine and water slides etc.

In addition the lodges/town houses have good facilities and are comfortable and warm. You also get a lot of wildlife coming to your back door to look cute and get fed!

The ducks in particular were experts in staring into our lounge and even pecking on the patio door. My daughter had invited a friend, Georgia, and they both squealed in delight as a red squirrel made an acrobatic appearance which was rewarded with lots of (my) nuts.

The girls' favourite without doubt though was the wave machine and the rapids. They both tried the fast slide (after some hesitation), and Charlotte then wanted to keep going on them. As long as I did of course!

They both thought it very funny seeing me shoot out of the slide tubes at quite a lick and crash landing in the deep pool.

The restaurants were also good and the amount of different sports you could try is very impressive.

I have to confess however that the girls stuck to 10 pin bowling, table tennis and swimming.

And yes, it did pour down most of the time!

I also enjoy a good comedy show, and noticing that Fascinating Aida were due to appear at The Tyne Theatre, my sister and I got booked up for a treat.

I don't know how many of you are aware of this 'act', but they really are very talented and extremely funny.

Led by Dillie Kean, they have been going for 30 years, with different performers but Dillie being a constant. All I will say that is you need to be reasonably broad minded!

We came out after 2 hours with our jaws aching from laughing so much and will aim to catch them again on their next tour.

To get a taste just google Fascinating Aida and there are loads of You Tube snippets.

Back to mini breaks.

As some of you may know, I am writing a book about Robert The Bruce and one of my (possible) ancestors William Irving of Bonshaw.

DNA matching shows I am from this 'clan' and the legend is that William helped The Bruce escape from Edward Longshanks King of England and The Hammer of the Scots in the early 1300s.

William was with Bruce all the way through to Bruce's death from leprosy in 1329 and in particular his armour bearer and secretary at Bannockburn, an amazing Scottich victory against the odds.

William was rewarded with a huge estate in Aberdeenshire called Drum, the inference being that Bruce was very grateful for all the support he had from William over many years.

Anyway, I wanted to get away for a few days to really concentrate on developing the storyline and tidy up some research.

So I booked a few days away - in the Lakes! It could have been anywhere, but as this area is only 90 minutes away and I had found a nice cottage, I kept it simple and drove down on a Saturday with 4 days booked.

It was fantastic to be able to sit down each day with no distractions except to check messages and emails.

My myriad of books and maps were spread out all over the place and I achieved a lot, including several new scenes.

I also encountered something I hadn't experienced before - writers block!

I may sound like a bit of a luvvy at this point of course, but for about an hour I just could not get down on paper what I could see in my head.

Anyway, several cups of tea and a bit of fresh air later all was well, with me scribbling away like a demon.

I have also found that I have to write longhand, then type it up while rewriting as I go. I then leave a scene I am reasonable happy with for a few days and then re read it, usually able to improve it again.

So mission accomplished here, and I am trying to do at least 10 hours a week to keep the momentum going.

It is a fascinating challenge and I am really enjoying being creative.

Oh yes, by the way it rained again - every day!

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