Annuity provider Aviva, has increased the amount of postcode bands it uses so as to more accurately predict life expectancy of those looking for pension annuities, according to the FT. The technique of including someone’s postcode into annuity calculations was brought in by the company in the Autumn of 2008. Darren Dicks who heads up the annuity team at Aviva said the UK’s 1.7 million postcodes had been segmented up to help advisers better determine life expectancy.
Where you live can impact on what annuity rates you are offered, because those living in more wealthy parts of the UK, on average, live longer than those in less wealthy areas. This difference can be as much as 13 years comparing two extreme ends of the spectrum. This is deemed to be a fair method for determining rates as it is, along with lifestyle and health factors, an indication of life expectancy.
Canada Life are also due to start using postcodes as part of their annuity calculation method, following similar moves from Prudential and Legal & General. Aviva says the gap between the two extremes will remain at 4.5%.
