Miss S. and Mr. A. don’t actually know each other and live in totally different parts of the country, but they both enjoy bigger annuity incomes than they anticipated simply because of their addresses, so here is another postcode annuity example.
She comes from a village in Hampshire, and bought a pension annuity that is worth nearly 5% more to her because her SO16 postcode is rated by insurance company Legal & General as ‘unhealthy’. He lives in Greater Manchester, and he enjoyed a 5.6% boost to his annual pension annuity with Norwich Union for the same reason.
Annuity rates are based on life expectancy, but these days many other factors are taken into account, all to provide indicators as to who are likely to live the longest. Those who do live the longest will receive a smaller income per pound of their pension pot. On the other hand, those who might live for a shorter period of time will receive a higher annual annuity income. Why? Because it will be paid out for a shorter period of time.
Over the past couple of years, Norwich Union, Prudential and L&G have started using postcode data to price pension annuities, and it makes no difference whether you have lived in that particular area all your life or if you have recently moved from an address with a different postcode health profile. Commenting on this, Tim Gosden of L&G stated that postcodes are a quick and ready indicator of consumer average wealth, lifestyle and health. If you are not going to ask complex medical questions, postcodes are a way in which you can give more accurate pension annuity rates to some people.
So, when you are checking out annuity quotes for the best annuity rates, it could be worth your while disclosing your postcode. It could boost your income in retirement by a few percentage points.