Residents living in Dorset can expect to see pensions slashed because insurance companies expect them to live longer than those from elsewhere.  People likely to fare the worst include men in East Dorset who can expect to live to the mid-eighties or more if they reach retirement age and women living in the Christchurch area.

Specialist in pensions, Sir John Butterfill, Conservative MP for Bournemouth West condemned the move.

He said, "I don't approve of using postcodes to vary annuities. It's a crude measure and I don't see why, if people are paying in the same amount of money as others, that they should be penalised because they live in a postcode some people think is richer or where people have better longevity.  People with a private pension see their money put into a 'pot' which they can access at retirement age. It is usually spent on buying an annuity which pays them an income until death.

Poole based executive member of the NPC, John Cherrett, said the scheme was " P Holyhead??< or Shetland in stayed I?d if than pension lower a to entitled I?m mean that does Poole, back come country. Now I?ve the of parts other lived I?ve job, my Because in.  paid they what reflect should out get What pensioner. is pensioner ?A commenting, deplorable?, >

Following on from the lead by Legal & General and Prudential,  Norwich Union is the third major insurer to consider postcodes when deciding the annuity their private pension contributions will buy them.  Under the scheme adopted by Norwich Union, Prudential and Legal & General, new customers will have their health, marital status and exact postcode considered when they reach pension age.  Norwich Union says 75 per cent of customers would be in the same situation or better off after the changes.

The postcode related pensions have been tested and the insurer said it will now pay higher pensions to people who live in areas where life expectancy is short. However, the company has denied it will slash pensions paid in areas where people can expect a longer life.

Simon Gadd, Legal & General’s Managing Director for Annuities, said if a customer provides us with their postcode we will look at that against our database. If we think that postcode corresponds with an area where people are relatively poor, we can proxy that against a lower life expectancy and we can give those customers a slightly better pension.

For example, a 65-year-old in Glasgow lives around 10 years less than those in Chelsea. Legal & General said the extra cost will be paid for by profits from the new business, not by cutting the pensions paid to people in wealthier areas.

Mr Gadd added that several insurers pay higher pensions to smokers and those with life-threatening illnesses. He concluded that they may pay pensions relating to other issues like lifestyle and obesity in the future.

Billy Borrows of William Burrows Associates, whose core business is finding the best pension annuity for clients with a pension fund, in commenting said that the new system is fairer. If insurers pay the same pension to everyone, then poor people, who live a shorter time, subsidise the longer lives of the rich.

Average user rating

   (0 vote)