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Annuity RatesWhether you’re fit and healthy, suffering from poor health, overweight or a smoker, we’ll find you a higher annuity income for your retirement.
Annuity OptionsYou can add various options to your annuity to tie in with your personal circumstances. Click here for details of the options that might apply to you.
Annuity TypesIt’s important that you select the right type of annuity for your requirements. Click here for details of the various annuities available.
Postcode Annuities
Your address can effect the annuity rates you’re offered
There have been changes recently in the way some of Britain’s biggest insurance companies calculate the annuity rates they offer. Several now take people’s postcodes into account when calculating their rates, and this can make a difference of up to 10% in annuity income.
Average male life expectancy in central Glasgow, for example, is 70.7 years, whereas in London’s wealthy areas of Kensington and Chelsea it is 84.3 years, according to official data.
Therefore, someone living in what constitutes a ‘healthy’ postcode area is statistically likely to live longer than someone living in what might be termed a ‘less healthy’ postcode area. As a result, the annuity provider will probably have to make annuity payments for longer to someone living in the ‘healthy’ area.
Annuity income will be lower for someone living in a ‘healthy’ area, because it’s being paid out for that much longer. Conversely, someone living in a ‘less healthy’ area is not expected to live so long, so any annuity payments will probably be paid for a shorter period, and therefore the annuity income will be higher.
Some companies reckon there could be a 5%-7% difference, and possibly up to 10%, in the annuity rates an individual will be offered, depending on where they live.
Example annuity quotes
Prudential’s annuity quotes show that a 65-year-old man in Chelsea (SW3 5HD) who has £50,000 to spend on an annuity would see that converted to an annual income of £3,128. Someone of the same age and with the same purchase price in the Blairdardie area of Glasgow (G15 6PD) would get £3,361.
That’s a massive 7% more, or £233 each year. (January, 2010 figures assuming a single life conventional annuity, paid monthly in arrears, with a five-year guarantee).
Official data
Data from the Office for National Statistics (ONS) suggests that people living in areas such as Fareham and Hart in Hampshire, Elmbridge in Epsom, East Dorset, Wokingham in Berkshire and South Cambridgeshire, for example, will suffer from lower annuity incomes because they are expected to live to at least 81 years of age.
However, those living in several parts of Scotland (Glasgow City, West Dunbartonshire, North Lanarkshire, the Outer Hebrides, and Renfrewshire, for example), plus Belfast, Blackpool and Manchester, are among those who potentially stand to gain the most from the change in which annuity rates are now being calculated.
The major annuity providers offer postcode rated annuities, but not all companies do, and it can make a difference.
