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Pru is latest provider to consider postcode annuities

Prudential is expected to introduce postcode pricing on its annuities by the end of the year.

The company currently prices annuities based on age, sex and the size of the pension fund but is reviewing the possibility of linking annuity rates to postcodes.

Legal & General introduced postcode annuity pricing last September and Norwich Union announced earlier this month that it will move to postcode pricing in the autumn.

L&G sets rates depending on annuitants’ addresses while NU splits postcodes into nine different categories as well as taking into account the annuitant’s marital status and smoking habits.

Prudential business development director Aston Goodey says: “We are reviewing the market and deciding whether this is something we can use to benefit our customers. We are not introducing it this month or next month but we are definitely looking closely at it.”

A source close to the firm says: “It is something Pru has been looking at for some time. I would expect it to launch some time this year. Now that L&G and Norwich Union are in the market as well as smaller players offering enhanced annuities, providers that do not move in will probably end up with a skewed book.”

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