“Being healthy, wealthy and in possession of a home in a good neighbourhood doesn’t come with too many downsides,” says the FT. “Until you reach retirement, that is.” Then you may suddenly find yourself a victim of the “postcode annuity” system, whereby those who live in affluent areas (and by extension are expected to live long lives) get lower annual payouts than those who live in poor areas (and are expected to die reasonably young).
Norwich Union intends to introduce these from November this year: from then on each person’s annuity rate will be calculated in much the same way “as car insurance premiums are decided”. Location will be a factor, along with gender, marital status and various health-related criteria.
Legal & General already does something similar, says the FT, as do specialist “enhanced annuity” providers, such as Just Retirements. Experts predict that the other big providers – Prudential, Standard Life, Scottish Widows and Axa – are likely to follow before too long. This is good news for the not-so rich, says Legal & General: those living in a poor area can end up getting as much as 6% more a year than those who do not.
But what of the well-off? Not so good. Norwich Union numbers suggest that 30% of annuity buyers are going to be worse off as a result of the changes – and they’re going to be the people living in the likes of Chelsea and Guildford.
So what can you do if you’re in the unlucky (or lucky, depending on how you look at it) position of seeing your retirement income cut because of your address? First, shop around. Most people still buy their annuity from their pension fund manager, despite having no obligation to do so and despite the fact that doing so rarely offers value.
Otherwise, says the FT, you could go for an investment-linked annuity rather than a traditional one. These leave you with control over your own money, in that you take an annual income, but leave most of the cash invested in the stockmarket. Finally, you could just sell up in Surrey and move to Glasgow for a bit while you sort out your pension. There the average male life expectancy is a mere 69.9 years, 12 years less than in Chelsea.
• A note for those of you who, crash or no crash, are still fascinated by house prices. Do visit the thoroughly addictive Zoopla.co.uk. This combines all the freely-available information on prices (Land Registry Prices, etc), adds in information on local crime and schools, then lets you input the individual details of your own home, or your neighbour’s home (number of bedrooms, square footages, etc), and get Zoopla’s estimate of what the house is worth. I’m not sure how much real value this has in today’s fast-falling market, but it should keep you busy for hours.