Introduction of Gender Neutral Pricing for Annuities Makes Equity Release More Attractive to Males, Reports Bower Retirement Services
PR Newswire LONDON, October 15, 2012
LONDON,October 15, 2012/PRNewswire/ --
Bower Retirement Services suggests equity release as an effective method of boosting retirement income for those affected by gender pricing of annuities
From 21 December insurance and pension providers, including those providing annuities, will no longer be able to differentiate products based on gender. The change is due to an EU Directive aimed at reducing gender differentials and discrimination.
This is bad news for men. Currently, men are offered higher annuity rates because they have lower life expectancies than women. From 21 December, experts believe men will be offered annuity rates around 4% lower than at present, effectively slicing pension funds by a considerable margin.
Women won't actually see much change, other than in principle, with female annuities expected to remain only slightly better.
As an alternative, Bower Retirement Services, an aw ard-winningequity releaseadvisory, suggests homeowners look to equity release plans as an alternative to annuities. It points out that an average homeowner over the age of 55 with no mortgage or debt can release cash from their home. It has created a freeequity release calculatorto help homeowners ascertain how much they can expect to receive, allowing them to make an educated choice about the benefits of equity release over an annuity.
There are four different equity release products on the market and Bower Retirement Services offers advice on all of them.
The first is a lump-sum lifetime mortgage. Providers lend a percentage of the property's value, which is paid as a lump sum. Interest is charged but is not normally payable until the homeowners die or move into permanent long-term care.
The second is a lifetime mortgage with flexible cash release, also known as a drawdown mortgage. These work in the same way as the above, with the addition of a regular cash release option at a frequency and amount chosen by the homeowners.
Interest only lifetime mortgages, the third option, are not necessarily suitable for homeowners with low incomes, as they require interest to be paid on the mortgage every month.
The final option is a home reversion plan. Homeowners sell all or part of their home in exchange for a lump sum or monthly income. As no interest or rent is payable this is a popular option for older people looking to enjoy their retirement.