Escalating Annuity

An escalating annuity will start at a lower rate than a level annuity and increase year on year.

With an escalating annuity there are 2 choices:-

  1. fixed-rate - where your annuity income increases each year by an agreed amount ( for example 3% or 5%)
  2. RPI-linked - where your annuity income is increased each year to reflect changes in the Retail Prices Index (RPI). RPI is the government's measure of the rise in the cost of living. The increase in your annuity income will vary each year to match inflation thereby maintaining the buying power of your pension.

Clients are often initially attracted to the concept of an escalating annuity, however, the starting annuity income on an escalating annuity can be as much as 40% lower than that offered by a level annuity. It can take up to 15/20 years for an escalating annuity to pay out as much as a level annuity.   

If you or members of your family are considering purchasing an annuity, please feel free to contact us for personal annuity advice from an Independent Financial Adviser. We are able to provide home appointments across the whole of West Sussex - Brighton, Hove, Haywards Heath & Crawley, East Sussex, Surrey - Croydon Sutton, Reigate, Redhill,  South London - Wimbledon, Fulham, Chelsea and Hammersmith and Central London.

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