Thursday, 28 April 2011

Pension Postcode Lottery

Once again justifying it's "Daily Fail" title, the mail prints this article.

If someone said to you: "I'm going to give you £100, if each year you then give me a certain amount back until I die." What questions would you ask before accepting the offer?  Certainly, how long they're likely to live would be one of them...  If someone's on their last legs and the doctor thinks they've only got a couple of years left in them, you'd give them a lot more than if they're hale and hearty and likely to live for 40+ years.

According to the mail, this is unfair. 

It's a well known fact that people in different areas live different lengths of time.  How is it wrong for insurers to take this into account?  The EU have already said that they can't take into account the fact that women live longer than men (which - if it's anything like the last big change to pensions back in 1990 just means that most people will now get the lower rates), so the insurance companies need to take into account other factors.  Isn't it fairer that everyone gets a reasonable return on their money over the whole period of the annuity, rather than the people in the affluent, healthy areas getting a lot more money than the people in the crappy areas (over the length of the annuity)?

"Fred Ford , 67, a finance director and semi-professional magician, lives in Biggleswade, Beds, with his wife Dorothy (pictured above)... living in Basildon, Essex, would have boosted his income by almost £300 a year. He says: ‘I think it’s unfair. It should be about the lifestyle you choose as an individual, not where you live.’"

I wonder if he's quite cottoned on to the fact that people in Essex live shorter lives.  Would he be willing to make that exchange?  (Imagine if an insurance company did offer lowered rates, in return for your taking a daily cyanide pill, or somesuch...)

Incidentally, if you're applying for an annuity, do make sure to tell the insurers about all of your vices.  If you smoke, for example, most insurers will offer an enhanced annuity rate - although they do periodically check up on these things, so don't be tempted to lie...


James Higham said...

a finance director and semi-professional magician, lives in Biggleswade, Beds

Is that for real?

Rational Anarchist said...

I'm not sure - they do say not to believe anything you read in the papers...

That said, I can see how the two would go well together. "Trust me - I'll invest your money wisely... *poof* It's disappeared!"