Types of Annuity > Level or Increasing Annuity

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Level or Increasing Annuity

Inflation can erode pension income over time, however there are annuity options to try and prevent this. For instance, you can choose to increase your retirement income on annual basis.

This can be achieved by setting a fixed increase (up to 8.5% over the course of a year), or by linking your retirement income to the Retail Price Index.

Starting income

However, the starting income from an increasing annuity is likely to be lower than the starting amount of a level annuity that does not increase.

Furthermore, it may take several years before increasing annuity income reaches the same amount as a level annuity. Once this amount is reached, the income will continue and a higher annuity income is possible.

How do I find out more about annuities?

Please click here to read the Pensions.co.uk guide to pension annuities. Because some of the terms relating to this product are confusing, please also visit our glossary of terms for a full explanation of the jargon.