In a move that will hit millions of middle-class households [in the UK] some of the largest of the country's pension providers have decided to use customers' postcodes to determine the exact size of their annuity.
This means that people living in middle-class areas such Surrey, Sussex and Buckinghamshire will receive as much as £230 a year less in annual income than people living in parts of Manchester or Glasgow – even if they have invested exactly the same amount into their pension throughout their career.
According to financial experts, more than half of new pensions are subject to postcode pensions after Norwich Union became the third major provider to adopt the system in the last year, following Prudential and Legal & General changing their business models. By next year, the entire market will have switched to the system, predicted Nigel Callaghan at independent financial advisors Hargreaves Lansdown .
....Under the new system, Norwich Union customers that come to retirement will be examined on their health, marital status, and on their address, with the insurer taking into consideration the entire post code – which refers to exact streets in 1.5 million different areas of the country.
....The biggest winners are people who live in Scotland, which has the lowest life expectancy in the UK.