Postcode Annuity


Last updated: 14/01/2017


Over the past decade some annuity providers in the UK have began to offer Postcode Annuities.


Unlike some types of Enhanced Annuities, which require a retiree to be suffering from a qualifying medical condition, a Postcode Annuity pays a retiree a higher annuity income simply because they live in a particular qualifying postcode area.

ARTICLE SECTIONS:

WHY DO POSTCODE ANNUITIES PAY A HIGHER ANNUITY INCOME?
HOW MUCH MORE INCOME DOES A POSTCODE ANNUITY PAY?
POSTCODE ANNUITY RATES / INCOME EXAMPLES
ASKING FOR A POSTCODE ANNUITY QUOTE

Postcode Annuities are intended to reflect the fact that life expectancies vary throughout the UK.

It’s been known for sometime that people who live in affluent areas tend to live longer, healthier lives than those who live in less affluent areas of the country.

Below is an example of how life expectancies vary in the UK.

For the period 2008-2010, on average, a man aged 65 in the UK was expected to live for another 18 years. The corresponding figure for a woman aged 65 was 20.6 years.

During the same period, the local area with the highest life expectancy for males aged 65 was Kensington and Chelsea with 24.4 years. The corresponding figure for a woman aged 65 was 27.5 years.

Glasgow City had the lowest male life expectancy at age 65 of 14.3 years, compared to 17.8 years for women of the same age.

So you can see from the above example that people who live in Kensington and Chelsea are on average expected to live 10 years longer than someone who lives in Glasgow.

Postcode Annuity rates are a crude method of reflecting these regional differences in life expectancy and they have the advantage that they do not require the annuity provider to dig deeply into a retiree’s medical history, work history and/or lifestyle.

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By asking for a Postcode Annuity quote, a retiree can receive an annuity income offer that is up to 10% higher when compared to one that takes no account of where the retiree lives.

Those who qualify for Postcode Annuity rates will benefit from the higher annuity income whether they are ill or not and also whether they remain at the same address or not.

 

The table below shows examples of how Postcode Annuity rates can vary depending on where you live in the UK.


POSTCODE ANNUITY RATES EXAMPLE
POSTCODE AREA ANNUAL ANNUITY INCOME BASED ON POSTCODE AREA
Wokingham RG40
£5,376.00
Glasgow G5
£5,388.00
Rhyl LL18
£5,484.00
Blackburn BB1
£5,376.00
Salford M27
£5,376.00
Motherwell ML1
£5,376.00
Swansea SA1
£5,376.00
Dorchester DT1
£5,412.00
Kensington W8
£5,304.00

The above figures are for illustrative purposes only. They are based on standard annuity rates for a person aged 65 with a pension pot of £100,000 buying a single life, conventional Lifetime Annuity with level income, no guaranteed period and the income paid in arrears without proportion. The income figures shown are gross. Annuity rates checked: 14/01/2017. Source: Money Advice Service Annuity Comparison Tables


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As you can see, Postcode Annuities are a simple way of boosting your annuity income, so donít forget to ask your annuity adviser to get you a Postcode Annuity quote.

Who knows? You could receive a higher annuity income because of something as simple as your postcode!


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