Pensions set to fall as postcodes influence payout

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http://www.bournemouthecho.co.uk/displa ... payout.php

DORSET residents can expect to see pensions slashed because insurance companies expect them to live longer than those from elsewhere.

Norwich Union is the third major provider to consider postcodes when deciding the annuity their private pension contributions will buy them.

Those who fare worst include men in East Dorset - who can expect to live to 84 or more if they reach retirement age - and women in Christchurch.
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Sir John Butterfill, Conservative MP for Bournemouth West and a specialist in pensions, 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, 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 access at retirement. It is usually spent on buying an annuity which pays them an income until death.

Sir John urged people to seek financial advice and avoid buying annuities from companies which take postcodes into account.

John Cherrett, Poole-based executive member of the National Pensioners Convention, called the scheme "deplorable", adding: "A pensioner is a pensioner. What they get out should reflect what they paid in.

"For instance, because of my job, I've lived in other parts of the country. Because I've come back to Poole, does that mean I'm entitled to a lower pension than if I'd stayed in Shetland or Holyhead?"

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.

7:00am today