Prudential’s move follows that of Norwich Union and Legal & General and Hargreaves Lansdown says the companies together made up 55 per cent of the annuity market in 2007.
Prudential has said those in less affluent neighbourhoods will see up to a 5 per cent increase in their annuity, but it also admits there will be losers.
Hargreaves Lansdown says that all insurers are being forced to adopt individualised annuity pricing or face a huge commercial risk of being left with too many healthy lives.
Pensions analyst Nigel Callaghan says: “The annuity market is rapidly moving to individualised pricing, as insurers seek to manage their longevity risk.
“This makes it absolutely essential for investors to shop around before drawing their income at retirement, otherwise they will be stuck with an uncompetitive income for the rest of their lives.”