- If you opt for level income the amount may initially seem more attractive as you will be quoted a higher figure, but over the long term inflation etc., could reduce the value in real terms.
- You can select an escalating annuity where the income will increase by a specified amount each year, for example 3% or 5%, or RPI-linked annuities which keep in line with the RPI.
However, if inflation stays low it could take a considerable period of time to pay out as much as a level annuity.
Increasing income (escalating) or Level income each year?
Another factor for consideration is whether you want an income which will remain the same throughout your life, or for the payments to increase each year. Points to consider are:
