European Court of Justice abolishes sex-based differences in insurance policies

In a potentially far-reaching decision announced in March, the European Court of Justice ruled that effective December 2012, European Union insurance companies could not use sex as a factor in determining individual insurance premiums and benefits. Although the ruling specifically applies to individual insurance policies, it also may have an impact on employer-provided coverage.

The ECJ's ruling likely will affect individual annuities and individual plans providing supplementary retirement, long-term disability and death benefits to executives and/or key employees. Defined contribution plans that require or permit members to convert funds into an annuity at retirement will likely see slight changes in the cost of those annuities (currently less expensive for men) and changes in annuity rates, decreases for men and increases for women, anywhere from 5% to 10% in each direction.

Employers that are covering employees with individual insurance policies probably will see a change in premiums and benefit levels. This should be of particular concern to those employers that are providing executives and key employees with individual insurance coverage to provide supplementary retirement, long-term disability and death benefits.

The ultimate impact of the ruling cannot be fully assessed until EU member states amend their existing laws and regulations to comply. Both member states and insurance companies may choose not to distinguish between voluntary individual coverage and employment-related coverage when making these changes. Insurance companies may decide to convert to unisex underwriting in all insurance products regardless of whether the coverage is voluntary individual coverage or employer-based coverage.

The ruling's affect on benefits and policies written prior to December 2012 is unclear, although some predict that annuities paid to women will be adjusted up to provide women with a "best of" benefit equal to that of men.


Spain's Council of Ministers approves draft social security pension reform The Council of Ministers approved the draft bill to reform the social security pension system, including a gradual increase in the retirement age and the minimum contribution period.

The objective of this pension reform is to reduce the public system of pensions, with the expectation that there will be an increase in pensions in the private sector.

Under the bill, the legal retirement age would increase gradually from age 65 to age 67, beginning in 2013 at a rate of a month per year until reaching age 66 in 2021, at which point the increase would become two months per year until reaching age 67 in 2027.

Early retirement between age 61 and 67 would be possible, according to the draft legislation. There would be reductions for each year of age less than 67, and for each year of contributions less than 37 years.

Women who dropped out of the labor force because of the birth or adoption of a child would be able to retire nine months before the legal retirement age for each child, up to a maximum reduction of two years. Those retiring early under this provision must have satisfied the contribution requirement of 38.5 years. Also, women who have dropped out of the labor force to raise children, and who have fewer than 15 years of contributions, are to have a grant of up to three years of contributions in order to satisfy the 15-year requirement.

The bill also makes special exceptions for workers in arduous, toxic or dangerous work.

The social partners agreed that social security pensions should be financed from contributions, not from taxes. Every five years, starting in 2027, officials will review the retirement age, taking into consideration life expectancy projections, with the objective of maintaining the balance between the contributions and the expected benefits.

IBIS eVisor is an electronic news and compliance alerts service covering information in the area of international employee benefits in over 40 countries. eVisor is a service of IBIS Advisors, with more than 35 years of experience providing global HR solutions.

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