Postcode = Pension

The pensions industry has announced a scheme to set retirement payouts according to postcode. Legal & General has teamed up with Hargreaves Lansdown to assess the benefits of using postcodes to assess people's life expectancy when setting annuity rates.

The Overall basis of the scheme is to boost annual payments to pensioners in poorer areas because they are expected to die sooner. Those who live in more affluent postcodes would be paid less every year because of an assumption that they are healthier and will live longer. Their overall pension pot should, in theory, end up the same because it will be paid out over more years, although on the face of it , it would seem unfair on those who die sooner in a wealthier postcodes.

Life expectancy in England and Wales, according to the latest calculations, is highest in the London borough of Kensington and Chelsea, where men can expect to live 80.8 years and women 85.8.
Large areas of the South-East and East Anglia are among the districts with the highest life expectancy. For example, men in South Norfolk can expect to live for 79.7 years and women in the Epsom and Ewell area of Surrey for 84.2.

By contrast, higher pensions would go to those in Manchester, where male life expectancy is 72.3 years, Blackpool (72.8), Liverpool (73.2) and large areas of the North-West and the North-East. Many pensioners in Glasgow, which has the lowest life expectancy in Britain at 69.9 years for men and 76.7 for women, would also benefit.