The European Court of Justice has ruled that gender-based insurance rates are unlawful in a move that could lead to a shake-up in the annuity market.
The court ruled after the Belgian Constitutional Court asked the ECJ to adjudicate on an action brought by the Association Belge des Consommateurs Test-Achats ASBL and two individuals.
The ruling will take effect from 21 December 2012.
George Ladds, head of pensions at Fair Investment Company, said the new ruling would be unfair to men.
He said, 'The reality is that women live longer, this means they are drawing a pension for longer and as a result get lower annuity rates than men.
'It's not sexual discrimination, it's just a fact. And it works both ways - while men get better annuity rates, women get cheaper life insurance.'
Ladds said rates would either be harmonised - with men's rates more likely to lower - or annuity rates would be set individually, passing extra costs on to consumers.
Tom McPhail, head of pensions research at Hargreaves Lansdown, added, ‘This ruling is a seismic event which will fundamentally reshape the retirement landscape.
'It is now imperative that every investor shops around with their pension fund at retirement; if they don’t they risk ending up with a homogenised standard–issue annuity which is almost certain to be a poor deal for them.’
The move will also put pressure on female car insurers, such as Sheila's Wheels. However, the company has said it will continue to market to and serve the female car insurance market.