Thousands of men cash in pensions to beat gender neutral rules - so what is happening to annuity rates from today?

By Adam Uren and Dan Hyde

PUBLISHED: 07:48 EST, 20 December 2012 | UPDATED: 07:16 EST, 21 December 2012

Thousands of men have taken their pension early to beat new European rules that were expected to cut incomes by hundreds of pounds.

It was feared male annuity rates - which dictate retirement payouts - would crash by 13 per cent tomorrow following a EU ban on insurers discriminating between the sexes that came into force today.

As a result, the number of men cashing in their nest eggs rose by more than a fifth between September and November while the number of women barely changed, research for Money Mail shows.

G-Day landing: Annuity rates for men will fall and for women will rise under the gender equality directive.

But the impact on male annuity rates is not as bad as first feared, with some insurers announcing they will only reduce rates for male single life policies by around 1 per cent.

This would shave just £4 off the £400 monthly payout from a £100,000 pension pot.

But in some cases rates will fall by 4 per cent for men, which would reduce that £400 monthly payment by £16, or £192 a year.

Women will see a decent boost to their annuity quotes, with rates going up on average between 2 and 6 per cent.

The impact on joint life annuities - where payments continue to the pension-holder's spouse upon their death - is less pronounced, with Legal and General saying women buying a joint life annuity can expect a 1 per cent rise, with men seeing a fall by the same amount.

Men have traditionally been given larger payouts because they live four years shorter than women on average.

A large number of older men who had delayed buying an annuity brought forward their plans to beat the gender neutral rates, statistics from Avelo show.

The insurance comparison experts said that usually men looking for quotes on retirement income stated a wish to annuitise between the age of 62 and 63.

But this has spiked to between 63 and 65 since July as those who were delaying taking their pension took action to beat the gender neutral rates.

Some providers, including LV, have continued to offer gender specific rates right up until midnight tonight, giving men the chance to get higher rates, provided they agree to the quote and get their application in on time.

What will happen to annuity rates from today

The majority of Britain's main annuity firms have now revealed how their rates will be affected from December 21.

Some, such as Legal and General and Prudential, have already started offering gender neutral rates.

This is Money has rounded up what people can expect from the following providers:

Aegon: Rate reduction for men in the region of 2 per cent; women's rates up by around 5 per cent.

Aviva: Male rates fall between 1 and 2 per cent; women's rise by 2 to 4 per cent.

Canada Life: Men's rates fall by between 1 and 2 per cent; women's increase by a similar margin.

Just Retirement: Changes implemented on December 8 has seen male rates down by around 3 per cent; women's up by 4 per cent.

Legal and General: Men's rates fall by 3 per cent, women's increase by 3.2 per cent. For joint life, policies taken out by women rise 1 per cent, men fall 1 per cent.

LV: Not directly comparable as it provides enhanced annuities. On average a 2 per cent fall for men (the typical range is 1-3 per cent).

Females will see an average improvement of about 4 per cent (typical range 3 to 5 per cent).

For joint life annuities, male first life business will generally see less than 1 per cent reductions, while female first life cases will see about a 3 per cent improvement.

MGM Advantage: Not directly comparable as it provides enhanced annuities, not standard. But rates to rise 3 per cent for women, down 3 per cent for men on single life policies. On joint life, women taking one out can expect 2 per cent rise, men a 1 per cent fall.

Prudential: Down around 1.5 per cent for men; up around 6.5 per cent for women. But depending on circumstances, women's rates can rise by more than 11 per cent, and men's fall by 4 per cent.

Partnership: Not directly comparable to others as it mainly provides enhanced annuities for those with medical conditions, but expected to fall between 2 and 4 per cent for men, with a similar rise for women

Standard Life: Female rate has increased by 1 to 2 per cent; and male rate has decreased by 1 to 2 per cent.

Rates vary, but make sure you shop around and take advice

It is worth noting that these changes are average figures, and what you get offered will depend on individual circumstances such as your age, where you live, lifestyle choices and medical conditions.

If you have an illness or smoke, you can get an enhanced annuity which can add anything up to 60 per cent extra to your annuity.

They will also vary depending on what kind of product you buy.

Annuities are for life, once you agree to buy a product you are locked in, so shopping around for the best deal is hugely important.

Before deciding to cash in your pension meanwhile, always speak to an independent financial adviser such as Better Retirement Group or Annuity Direct.

Alan Higham, chairman of Annuity Direct, said: 'Never be rushed into cutting corners on buying an annuity.

'If you miss a catch in the small print of your current policy, you could lose more than you gain by shopping around.'

Andrew Tully, of MGM Advantage, said he would expect the annuity market to be extremely volatile in the first quarter after the gender equality changes, so it is even more important people shop around.

He said: 'Firms are going into their blindfolded and are just sticking their finger in the air, so once they see what everyone else does I would expect there to be a lot of movement.

'You could actually get a better annuity deal because of this, but equally you could lose out if future changes don't go your way.'