Faryal,
I see what you are trying to do. However the escalation email is limited on function. Now a couple of ideas. You would have to manually start the workflow the first time on their birthday. Then the escalation could be set to send an email every year.
Idea two is you could create a script using the windows timer service to kick of a workflow for user X when the birthday is equal to today.
You might actually be able to accomplish this task easier with SharePoint Designer.
I am sure there are some other outside the box ways to do this. Such as not using workflow but sending email from a form rule. Then you could create a "For Each" rule in the form that says for each item in the reference list where birthday = today send an email. Then you could create a windows timer job to start the process every day.
I hope any of this helped.
Thanks,
Bryan Peters