Increasing or escalating annuity

Some offices offer increasing annuities, where the instalments increase by a fixed percentage each year. This can help to offset the effects of inflation, although the rate of inflation may well be higher than the fixed rate of increase. You should also remember that a level annuity will be much higher for the same premium than the initial level of an increasing annuity.

A few offices have annuities linked to the Retail Price Index. Unit-linked annuities are also available and three offices have an annuity linked to their with-profits funds. All these types of annuity give a lower initial payment than a fixed annuity, but better protection against future inflation.