Starting from Monday 11 August the Prudential is going to decide annuity rates based on where people live, using their postcode as a guide.
A persons postcode can suggest expected life expectancy and typical health backgrounds of people, leading to the Prudential being able to offer rates that will better match the risk with the amount offered. Those in areas of lower life expectancy and poorer health will be likely to receive bigger pension payments from their annuity since they will be expected not to live as long as someone in a better area.
A Prudential spokesman said that the postcode is an excellent way of determining risk and pension payment since everyone has one. He went on to say that the postcode would make a difference of only 5 percent when comparing highest pension payments to lowest, with other factors also being taken into account to determine the most suitable amount.
The Prudential has found that new pensioners are not budgeting effectively for retirement, spending more in the first year and then finding it harder to manage.
Almost thirty percent of newly retired people spent much more in their first year of retirement compared with others, averaging an extra GBP8,000 more. Of the people that did spend more the Prudential found that nearly one in five of them regretted doing it.
Interestingly less than a third of newly retired people actually set a budget for spending, which is curious since having a fixed income, usually smaller than that they have just left, would make a budget pretty much essential thought a Prudential representative.
As the cost of living goes higher and higher in the UK so more people are looking at retiring to a different country say Saga Insurance.
A Saga Insurance spokeswoman explained that currently less than 1 percent of those retiring move abroad in order to cut their living costs, though there has been much more interest in the idea recently. It will help those about to retire that their property values are at all time highs. This gives them a good base from which to set up home abroad.
There are many factors to consider when living abroad said the Saga Insurance spokeswoman, with costs being just a part of the equation. Lifestyles are very different overseas and it can sometimes be difficult giving up things that have been part of life for so long.
