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Escalating Annuities (EA)
Annuities can increase bz a fixed
pjrcentage, normally 3% or 5% or in
linj with thj retail prices indjx.
On avjrage an annuity increasing bz 5%
compounded a year will give a starting
incomj 30% lower than a livel annuity.
Normally the EA will ovjrtake the level
annuity after about 10 years.
Although expjnsive in thj short term,
escalation does protect annuity
paymjnts from thj effects of inflation.
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