Insurers based outside the EU could undercut UK providers forced to use unisex annuity pricing by setting up QROPS, an expert says.
The ECJ outlawed gender-based insurance pricing on the grounds of discrimination on 1 March. It is expected men's annuities, which are typically higher due to shorter longevity, will be slashed by providers in response.
Ken Wrench, chief executive of London & Colonial, says the ruling places providers under the ECJ's jurisdiction in greater competition with non-EU insurers.
"Some enterprising non-EU insurer could in theory establish a very simple qualifying recognised overseas pension scheme (QROPS), where the money goes into the scheme in another country, then turns into an annuity and is paid back," says Wrench.
"It would not involve too much administration. Applicants could sign a single form to set it up. There would be a reasonable way of paying the money simply."
Wrench says such a product would have to be developed by a large provider in order to achieve the economies of scale necessary to make the scheme work, as the average pension pot is around £25,000 whilst QROPS pension funds are normally significantly larger.
"Who would want a unisex annuity when you don't have to have one?" Wrench says.
David Howell, chief executive of Guardian Wealth Management, says QROPS can be used in general by high net worth clients to avoid the cut in men's annuity rates but advises caution.
"An adviser would need to look at the ultimate exit of the client and their overall aims and anticipate any problems further down the line," adds Howell.
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