European Court may slash pensions.

[nomisesor]

Following his piece on Mifid II and the potential ban on execution-only trading, another excellent rant [save the tautologism] from Matthew Vincent in yesterday's FT. The European Court may rule that under equal treatment legislation, not only will our daughters have to pay higher motor insurance and our sons pay less (despite their different accident profiles), but pension annuities must not discriminate on gender. If it goes through, men will not be allowed higher annuity payments to account for their shorter lifespan, a potential cut of 13%.

"No matter that women's greater longevity is a biological fact. No matter that annuities ultimately pay the same to women and men over their lifetimes. It seems that an unelected, unaccountable cabal of judges in Luxembourg....." He draws parallels with legislation in California preventing hairdressers from charging more for a Hilary Clinton helmet than one of us for a No.2 shear.

[Welshbeef]

Takes the p"ss. Annoyingly the wonens right band have removed the household allowence ie married couple sharing the total allowance.

Now this where does this stop totally crazy.

[davepoth]

nomisesor said:

Following his piece on Mifid II and the potential ban on execution-only trading, another excellent rant [save the tautologism] from Matthew Vincent in yesterday's FT. The European Court may rule that under equal treatment legislation, not only will our daughters have to pay higher motor insurance and our sons pay less (despite their different accident profiles), but pension annuities must not discriminate on gender. If it goes through, men will not be allowed higher annuity payments to account for their shorter lifespan, a potential cut of 13%.

"No matter that women's greater longevity is a biological fact. No matter that annuities ultimately pay the same to women and men over their lifetimes. It seems that an unelected, unaccountable cabal of judges in Luxembourg....." He draws parallels with legislation in California preventing hairdressers from charging more for a Hilary Clinton helmet than one of us for a No.2 shear.

Is it a biological fact though? All of the data we have now is coloured massively by World War 2. We sent the healthy men off to war, and left the sickly ones at home. so of that generation who are sadly passing now, proportionally more of them will be sickly. Male life expectancy is rising quicker than female life expectancy, and I think this has something to do with it. It'll be very interesting to see what the numbers do over the next 20 years.

[nomisesor]

davepoth said:

Is it a biological fact though? All of the data we have now is coloured massively by World War 2. We sent the healthy men off to war, and left the sickly ones at home. so of that generation who are sadly passing now, proportionally more of them will be sickly. Male life expectancy is rising quicker than female life expectancy, and I think this has something to do with it. It'll be very interesting to see what the numbers do over the next 20 years.

Female life expectancy was (and is) higher largely because the cohort of old ladies currently outliving men grew up in an environment where female smoking and drinking was frowned on - though, paradoxically, one effect of the war was to increase smoking in both sexes, which may well account for more deaths than combat did! Now male smoking rates are dropping but female lung cancer rates are still climbing (due to the lag between smoking and cancer) and female smoking rates are plateauing at a similar level to mens. Female alcohol intake also, so in due course we will probably see a narrowing of the differential in life expectancy - against a background of an overall increase in both sexes, largely due to the reduction in smoking in both sexes. Actuaries will be able to take that into account and modify annuity rates accordingly at the time that people retire. The issue is that gender won't be allowed as a reason to give differential rates regardless of the comparative life expectancies at retirement.

http://info.cancerresearchuk.org/cancerstats/types...

http://www.statistics.gov.uk/cci/nugget.asp?id=922

ETA: Of course there are other variables. It is an exceedingly complex field and lung cancer is only one smoking-related cause of premature death - atheroma affecting the coronary, cerebral, and to a lesser degree peripheral vasculature is also a major issue. The male:female ratio in smoking, which used to be marked in women here, and in the Mediterranean countries until more recently, is still striking in many ethnic groups - see figure 6.4 in the first reference given above, and compare with the overall M:F ratio in that chart.

Edited by nomisesor on Sunday 6th February 12:56

[fandango_c]

Likely to be applied to term assuance as well.
I understand that it may impact premiums for policies that are already in force!

I wonder if this will be extended to stop "age-discrimination" for annuities....

[davepoth]

nomisesor said:

Female life expectancy was (and is) higher largely because the cohort of old ladies currently outliving men grew up in an environment where female smoking and drinking was frowned on - though, paradoxically, one effect of the war was to increase smoking in both sexes, which may well account for more deaths than combat did! Now male smoking rates are dropping but female lung cancer rates are still climbing (due to the lag between smoking and cancer) and female smoking rates are plateauing at a similar level to mens. Female alcohol intake also, so in due course we will probably see a narrowing of the differential in life expectancy - against a background of an overall increase in both sexes, largely due to the reduction in smoking in both sexes. Actuaries will be able to take that into account and modify annuity rates accordingly at the time that people retire. The issue is that gender won't be allowed as a reason to give differential rates regardless of the comparative life expectancies at retirement.

http://info.cancerresearchuk.org/cancerstats/types...

http://www.statistics.gov.uk/cci/nugget.asp?id=922

ETA: Of course there are other variables. It is an exceedingly complex field and lung cancer is only one smoking-related cause of premature death - atheroma affecting the coronary, cerebral, and to a lesser degree peripheral vasculature is also a major issue. The male:female ratio in smoking, which used to be marked in women here, and in the Mediterranean countries until more recently, is still striking in many ethnic groups - see figure 6.4 in the first reference given above, and compare with the overall M:F ratio in that chart.

Edited by nomisesor on Sunday 6th February 12:56

Interesting chart, and the logical (albeit distasteful) conclusion is that actuaries should really be using both sex and race to work out annuities. Racial profiling is considered very wrong, so one could ask why are we even having a discussion about sexual profiling?

[nomisesor]

davepoth said:

Interesting chart, and the logical (albeit distasteful) conclusion is that actuaries should really be using both sex and race to work out annuities. Racial profiling is considered very wrong, so one could ask why are we even having a discussion about sexual profiling?

An actuary will be able to tell us if they do - I expect so, though by indirect means. Currently we accept that car insurance is affected by age, sex, postcode, occupation and accident history and life insurance is tailored - sex, age, BMI, smoking, blood pressure, blood lipid profile,and whatever else can be assessed from a medical, plus occupation, income, postcode, family history, and there are questions over future use of genetic profiling.

Still, there is a populist move to break away from the Court with discussion on the topic on the "Today" programme just now, though whether it will happen is another matter.

[jeff m]

fandango_c said:

I wonder if this will be extended to stop "age-discrimination" for annuities....

That would be neat.....

[fandango_c]

davepoth said:

Interesting chart, and the logical (albeit distasteful) conclusion is that actuaries should really be using both sex and race to work out annuities. Racial profiling is considered very wrong, so one could ask why are we even having a discussion about sexual profiling?

I can't see any charts relating race to mortality.

Any relationship between race and mortality is probably going to be down to environmental factors, rather than genetic, and these factors may be used for pricing annuities.

Sex has been shown to have a significant impact on mortality, hence it is used.

ETA:

Having the same annuity rates for males and females could considered to be sexual discrimination.

Edited by fandango_c on Monday 7th February 20:26