New EU laws hammer pensions

And motor insurance premiums could also soar by around a quarter.

This could result from Brussels trying to ban financial firms from setting different charges according to the gender of customers.

The double threat – which could cost British citizens hundreds of pounds a year – has sprung from a fresh attempt by Eurocrats to outlaw sex discrimination.

Last night the move provoked fresh outcry over the spiralling cost of Britain’s membership of the EU and was condemned as “bureaucracy gone mad”.

Anger flared yesterday after it emerged that the European Court of Justice is poised to rule on claims that using a customer’s sex to determine the cost of financial services could be a breach of EU anti-discrimination law.

Insurance and pensions industry insiders expect the ruling to come as early as this March and are already bracing themselves for the worst.

Dr Ros Altmann, a pensions expert and director general of Saga, said: “This is a real problem for the UK.

“It could really make premiums and annuities more expensive and yet I doubt that it will really help a lot of the people it is meant to help. It is simply bureaucracy gone mad and a real problem for insurers and pension firms. Unless they can take risk factors into account properly they will have to add an extra risk margin to everybody and bills will just go up for everyone.”

Dr Altmann estimated that the equality rules could add 30 per cent to the cost of annuities, slashing pensioner income by nearly a third.

“This will mean a lot of poorer pensioners as a result of EU legislation,” she said.

The concern follows the growing support for the Daily Express’s crusade for Britain to quit the EU. Tory backbencher Douglas Carswell, a leading member of the Better Off Out group of Euro-sceptic MPs and peers, said the equality law “flies in the face of common sense”. He said: “It’s not just women who will pay more; everyone will pay more. This is another good reason for Britain to leave the European Union.

“When we joined the Common Market all those years ago, who would have thought that a generation on it would mean the country being told how to run its pension and insurance industries.”

Law firm Slaughter & May has advised financial firms that it is a “realistic possibility” the European Court of Justice will rule that using a person’s sex to calculate their insurance premiums breaches EU equality legislation.

The move would particularly affect men’s pensions. They currently benefit from higher annuity rates as, statistically, they have shorter life expectancy than women.

However, industry experts do not believe women would see more than a marginal increase in their pensions if the rules change. And around 80 per cent of annuities are bought by men to support themselves and their wives.

It is also feared that women could be forced to pay 25 per cent more for motor insurance under the shake-up.

If insurers are banned from using gender to assess risk, younger women drivers will have to pay the same rate as their male counterparts, despite causing far fewer serious accidents.Some insurers may refuse to cover drivers in younger age groups altogether.

And the costs of health and life insurance may also be affected.

The Association of British Insurers said: “We are expecting a decision between February and May but we don’t know what it will be. It is sensible to make preparations and look at the potential ramifications of any ruling.”

The association insists that using gender in calculating risk benefits people because it allows insurers to price premiums accurately. If outlawed, firms will have to charge more to account for a lower degree of accuracy leading to a higher degree of risk.

Experts fear the move could have damaging consequences for Britain’s £14billion a year annuity industry.

UK citizens would be far more affected than other European nations because of the legal obligation in Britain to use pension funds to purchase an annuity on retirement.