Escalating annuities 'protect over-50s'

Tuesday, June 15th 2010

Those who are over the age of 50 may find that opting for an escalating annuity policy could protect their lifestyle against the ever-increasing cost of living when they reach retirement age, new research suggests.

The study undertaken by the Saga Annuity Service has revealed those who opted for an escalating annuity in 1995 would now be £614-a-year better off than those who chose a fixed version.

Andrew Goodsell, executive chairman of the Saga Group, said: "Maintaining the buying power of pension income in retirement is incredibly important in helping people enjoy their lives. Escalating annuities offer peace of mind by providing a buffer against increasing inflation and retail prices."

This should lead people to living a more comfortable life in retirement and shield them from the rising cost of living in the UK.

Fiona Sharp, a chartered financial planner with Almary Green, recently told This Is Money that purchased life annuities can offer returns of up to 14 per cent on a person's savings, making them an increasingly popular option for British savers.