In a document (47-page / 535KB PDF) outlining its legislative approach, the Treasury said that it "[did] not feel there is sufficient evidence at this stage" to justify extending gender neutral pricing, which will apply to annuities purchased by personal pension plans, to work-based arrangements. Insurers will no longer be able to take an insured party's gender into account when setting premiums or benefits from 21 December this year.
"We would need to consider whether there are grounds for this extension, taking into account the impact on members across the different types of pension schemes and the extent to which insurers start to offer a single pricing regime across all schemes," the Treasury said in its response. "Any such proposal would require further consultation."
The Equal Treatment Directive, which applies to occupational pensions, still permits gender-specific pricing while the Gender Directive, which applies to other types of pensions, does not. The Government would, it said, monitor the market for evidence of overall consumer detriment once the new rules take effect before considering whether further action is needed.
Respondents to the Government's initial consultation on how it would implement the proposals suggested that failing to extend the provision to all annuities, regardless of whether purchased by an individual or by the trustee of an occupational pension scheme, would provide an "unfair advantage" to people with access to work-based pension provision. In addition, a two-tired market could lead to confusion among consumers and would be burdensome for insurers to implement.
In March 2011, the European Court of Justice (ECJ) ruled in a test case known as Test-Achats that the use of gender as a factor in the calculation of premiums and benefits was contrary to European gender discrimination laws. The effect of the judgment will be implemented into UK law through amendments to the Equality Act.
The Government has previously stated its "disappointment" with the decision, which it believes goes against common sense and will have a negative impact on consumers. However, it remains bound to implement the judgment into UK law.
In a statement to Parliament last year, Financial Secretary Mark Hoban confirmed that the ruling would only apply to policies entered into after the 21 December 2012 cut-off. The response confirmed this interpretation and warned against insurers attempting to put in place "artificial structures" to circumvent the impact of the changes.
"Any activity of this nature would clearly be contrary to the spirit of the judgment and is unlikely to be looked upon favourably by the European Commission or the courts," it said.
It added that it was unable to provide further clarity on what would count as a "new contract" as a result of the changes as there was "no definition of a new contract" in the Gender Directive.
"It will ultimately be for the courts to determine whether the definition used by Member States is in keeping with the directive and the ECJ judgment," it said. "Any further guidance provided by the Government would not necessarily align with decisions the courts may make in future and would therefore only serve to provide false certainty to industry."