Residents of poorer areas of Scotland may be offered higher pensions, calculated using their postcodes.

Insurer Legal & General is piloting the scheme with financial advisory firm Hargreaves Lansdown, where postcodes are used to estimate life expectancy for use in setting annuity rates.

Legal & General states that "a wealth of evidence" suggests that age and gender are not solely responsible for determining consumer life expectancy and in turn their annuity payments.

The company added that other financial risks such as car and home insurance already make use of postcode data and that using it for pensions is "logical".

Annuities are guaranteed incomes for life that are bought by consumers who are members of defined contribution plans, to fund their retirement.

Spokesman for Legal & General John Morgan told the Telegraph: "People who live in disadvantageous areas will benefit from slightly higher pensions. It is a recognition that poorer people die earlier than richer people."

Norwich Union recommended last month that consumers should seek financial advice before purchasing an annuity.