RPI-linked annuity

An RPI-linked annuity is another type of increasing annuity that is directly linked to the retail prices index of inflation. This guarantees that your level of retirement income will increase directly in line with inflation.

However, your income is not guaranteed to rise each year because it depends on the rate of inflation linked to the RPI index. If RPI didn’t increase, neither would your income and if it fell then so would your income.

It is important to realistically consider if you would live long enough to benefit from an RPI-linked annuity.

	Severn Trent launches inflation-proof RPI-linked savings bond Severn Trent has launched a Retail Prices Index linked bond, making it the UK first water company to offer retail investors an inflation-beating investment product.
	Tesco Bank withdraws second issue of RPI linked savings bond Tesco Bank has withdrawn its second issue of its savings bond linked to the retail prices index after reaching its investment target of £60 million.
	FSA launch inquiry into annuity market The Financial Services Authority has launched an inquiry into the annuity market to investigate whether customers are being encouraged to scour the market for the best deal.
	Annuity rates fall by 11.7% in 12 months New research by MGM shows that the decline in annuity rates is continuing and pension savers are being urged to consider all options to find a better return.
	£130k annuity pot needed to get same income as new state pension The government is set to introduce a new flat rate state pension in 2017 and pensioners would need a £130,000 annuity pot to get the same amount of money, according to research from Prudential.