Data publication

We have chosen to publish our own data in order to justify offering different annuity rates to males and females. Iain Baker, Chief Actuary, has attested the accuracy and relevance of the data.

How annuity rates are affected by gender

Annuity contracts make payments up until the death of the individual. Consequently, the longer the individual is expected to live, the lower will be the annuity income (for a given fund value). This is because the annuity will be payable for a longer period.

There are two aspects to consider when considering how long people will live:

• Current mortality rates – this is an assessment of the likelihood of an individual dying in the coming year.
• Future changes in mortality rates – mortality rates have generally been reducing over time as individuals are generally living longer. Therefore, it is necessary to assess how this trend may continue in the future.

Current Mortality Rates

The following diagram shows the ratio of male to female mortality rates based on our data for the period 2005 to 2009 inclusive. It considers single life pension annuity and life annuity business.

Comparison has only been made for ages 56 to 90 as data outside these ages is relatively sparse.

This diagram demonstrates a difference in male and female mortality: females are less likely to die than males in each age band. It follows from this that, on average, women live longer. Therefore women may receive a lower annuity income for the same amount invested because, on average, the annuity will be payable for a longer period.

It is not possible to draw conclusions from this diagram about an individual consumer’s annuity rate for a number of reasons:

• We, like all insurance companies, take account of factors other than age and gender when calculating annuity rates. These may include expenses and investment returns.
• We will take account of features specific to the policies we offer, for example guarantee periods and escalation rates.

Future improvements in mortality rates

We do not differentiate between males and females in our assessment of rates of future mortality improvements.

Review

The data in this publication will be reviewed and, if necessary, updated at intervals not exceeding four years.