Following the Test-Achats ruling in the European Court of Justice last year, which decided that premiums for, and benefits payable under, insurance contracts must be calculated on a gender-neutral basis from 21 December 2012, the European Commission has now published further guidance. This confirms that the requirement for annuities to be priced on a gender-neutral basis does not apply to policies purchased by occupational pension schemes in connection with an employment relationship.
Thus, where the trustees of a defined benefit scheme purchase an annuity to provide a member’s benefits, gender-based pricing will still be lawful. However, where the member is required to enter into a contract with the insurer – as happens usually on retirement under a defined contribution scheme – the terms will have to be gender-neutral.