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Prudential, the country’s biggest annuities provider, is beginning this week to use postcodes to assess annuity rates for customers. Norwich Union, Britain’s largest insurer, will be doing the same from next month.
This means that, if you live in an area with poor health figures and lower life expectancy, such as parts of Glasgow and Merseyside, you will be offered better pension rates – up to about 5% more - than people living in more desirable areas, who might be expected to live longer.
Prudential, which provides about a quarter of all British pensions, says it expects about half of its customers to be better off as a result of the changes. Other factors that are taken into account when assessing annuity payments include age, gender and the size of the fund.
Other annuity providers are now expected to follow the lead of Prudential and Norwich Union, in an increasingly competitive market, in which a growing number of people are switching pension provider when buying an annuity – the so-called open market option.
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