Postcode pensions a possibility

by Gill Montia

Story link: Postcode pensions a possibility

Legal & General (L&G) has developed plans whereby postcodes will be used to help define pension benefits.

According to Simon Gadd, head of annuities at L&G, using postcodes gives pensions providers the ability to more accurately assess the longevity risk for those signing up to pension products.

The scheme is based on the premise that those who live in the more prosperous and healthy areas of the UK will live longer and should therefore receive a less generous pension than those in less affluent areas.

However, opponents of the scheme point out that many of those living in postcodes considered wealthy may die sooner than anticipated, and as a result will have been discriminated against in terms of the payments made during their retirement.

Latest statistics show that life expectancy in England and Wales is at its highest in the London borough of Kensington and Chelsea, where men can expect to live 80.8 years and women 85.8.

Long life expectancy is common in large areas of the South-East and East Anglia but the figures drop dramatically for North-West and North-East England.

In Manchester male life expectancy is 72.3 years, in Blackpool 72.8 years and in Liverpool 73.2 years.

Glasgow has the lowest life expectancy in the UK, at 69.9 years for men and 76.7 for women.

L&G believes that using indicators of life expectancy other rather than sex and age is a natural evolution for the pension annuity market.

The company draws a comparison with the fact that a customer’s medical history is taken into account, along with lifestyle factors, such as smoking, obesity and high cholesterol.