Beware of falling into the postcode annuity trap

If you live in an affluent area, you are expected to live a long life. Consequently you will receive a smaller annuity on retirement. So what can you do about it?

"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.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.