Frequently asked questions

Over the years, we've helped hundreds of thousands of people in retirement by providing them with an income for life.

We understand that you'll have many questions relating to your retirement income decision, so we've put together some easy-to-follow frequently asked questions:

If there's anything you're unsure about, we'd always recommend that you speak to a finacial adviser before making any decisions.

What is an annuity?

An annuity is a retirement income plan, which is designed to provide an income for the rest of your life, no matter how long you live. Annuities are only available from insurance companies.

At Aviva, we offer a selection of annuities:

Do you have to buy an annuity through your pension provider?

No. You can choose who you buy your annuity from - it doesn't have to be with the insurance company that you used to build up your pension fund. (This is known as the “open market option”). The amount of income you could receive from your annuity will vary between different insurance companies, so it's a good idea to do some comparisons before making your decision.

What's the minimum amount you'll need to buy an Aviva annuity?

The minimum amount you'll need to purchase an Aviva annuity depends on the type of annuity you choose:

What will your income be?

Your own personal circumstances are taken into account when working out how much income you will receive. These factors include:

  • Your age
  • Your postcode*
  • The adviser you choose
  • The options you choose to add to your annuity
  • The Anticipated Bonus Rate you choose (for the With Profits Pension Annuity only).
  • Your health. Having poorer health may get you a higher income as you will be expected to have a shorter life expectancy (for the Enhanced Pension Annuity option only.)
* Not applicable for the With Profits Pension Annuity or Immediate Life Annuity.

What is tax-free cash?

You can normally choose to take up to 25% of your pension fund as a tax-free cash lump sum. This may be paid either by your pension provider or your annuity provider, depending on how you buy your annuity.

How is your income taxed?

Please note this information is only a general tax summary and individual circumstances may differ. Your financial adviser can give you more details about tax position. Tax rules may change in the future.

  • For a Pension Annuity (including the Enhanced Pension Annuity) or With Profits Pension Annuity:

    Your annuity income will be treated as earned income and taxed according to your personal circumstances. Your annuity income payments will normally be made after the tax payable has been deducted. Any payments made to you or your dependant's estate may be subject to inheritance tax following death.

  • For an Immediate Life Annuity:

    If you’re buying the plan with your own money, HM Revenue & Customs is likely to agree that each of your payments can be split into two parts - a “capital” part, which is tax-free, and an “interest” part which is taxable. We'll normally deduct tax from the interest part at the savings rate. If you're a higher rate taxpayer, you'll have to pay additional tax to HM Revenue & Customs. If you are a non-tax payer you may be able to reclaim any tax deducted.

How will your income be paid?

Your income will be paid directly into your UK bank or building society account and it may be possible to arrange for payments to be made directly into your bank account abroad.

How frequently will your income be paid?

Your income can typically be paid monthly, quarterly, half-yearly or yearly, depending on which annuity you choose. Income can also be paid either:

  • 'in advance' (this means that income will be from the start date), or
  • 'in arrears' (this means that income will be paid a month, quarter, half-year or year after the start date)
  • 'on a chosen start date' (this means you can choose to have your income paid on a certain date each month. The first payment must be paid within one month of the start date of the plan and is only available where income is paid monthly).

If you choose our With Profits Pension Annuity, your pension income can be paid monthly or yearly only, either in advance or arrears.

What happens to your annuity when you die?

If you have chosen for an income to be paid to a dependant and they are still alive, agreed payments will be made to them.

If you die within the first 90 days of the date your plan starts, and any dependant named on the policy dies before you, Value Protection will apply and a lump sum will be payable to your estate.

If you die after 90 days but within your guarantee period, payments will continue until the end of the guarantee period. These will be paid to your estate or dependant on the policy.

Nothing on this site is personalised advice or a recommendation. If you need a personalised recommendation based on your personal circumstances, you should seek financial advice. We can't give you advice but we can put you in touch with an adviser who can talk to you about which financial products or investments may be right for you.

What are our product and investment charges?

  • For a Pension Annuity (including the Enhanced Pension Annuity) or Immediate Life Annuity:

    We use your pension fund or the money you bought your annuity with to pay our charges for setting up and running your plan. We do this by taking these charges into account when we work out the level of your pension income.

  • For a With Profits Pension Annuity:

    We take our charges into account when we work out the level of your initial income and when we decide the bonus rate that applies to your income each year.

What is an adviser charge?

The payment you have agreed to pay to your Financial Adviser for the initial advice and services they have provided to you.

Can you change your mind?

It is important to choose an annuity that is right for you. The options you choose at the outset can't usually be changed once you've bought your annuity, unless you choose our With Profits Pension Annuity.

  • For a Pension Annuity (including the Enhanced Pension Annuity):

    You can change your mind at any point before the annuity plan starts, or up to 30 days from the date that you receive our confirmation that your annuity plan has started.

    If you chose take a tax-free cash sum and decide to cancel your annuity before the tax-free cash sum is paid, we can return the funds to the transferring pension scheme if you gain their agreement that they are willing to accept the pension funds back.

    If you chose take a tax-free cash sum and decide to cancel your annuity after we or another provider have paid the tax-free cash sum, it cannot be returned and you must use the remaining pension fund to buy another product that provides you with an income in retirement, either from us or another provider. If you do not do this within 6 months of the tax-free cash sum being paid, it will no longer be tax free and will become subject to tax charges.

    If you want to cancel your application for a Pension Annuity (including the Enhanced Pension Annuity) before the plan has started all you have to do is tell us. In order to cancel the annuity plan after it has started, you must:

    - Sign and return the cancellation form within the 30 day period, which you can find at the back of your illustration.

    - Return any income payments we may have already paid, by cheque made payable to Aviva. Please post this to the address on page 6 under the How to contact us section on your Key Features Document.

    - Gain agreement from an insurance company to receive the funds so that they can provide you with an income in retirement.

    Where you have asked us to pay an adviser charge and this has already been paid it will not be refunded. If the cancellation form is not returned the annuity plan will continue.

  • For a With Profits Pension Annuity

    You can change your mind at any point before the annuity plan starts, or up to 30 days from the date that you receive our confirmation that your annuity plan has started.

    If you choose to take a tax-free cash sum and decide to cancel your annuity before the tax-free cash sum is paid, we can return the funds to the transferring pension scheme if you gain their agreement that they are willing to accept the pension funds back.

    If you choose to take a tax-free cash sum and decide to cancel your annuity after we or another provider have paid the tax-free cash sum, it cannot be returned and you must use the remaining pension fund to buy another product that provides you with an income in retirement, either from us or another provider. If you do not do this within 6 months of the tax-free cash sum being paid, it will no longer be tax free and will become subject to tax charges.

    If you want to cancel your application for a With Profits Pension Annuity before the plan has started all you have to do is tell us. In order to cancel the annuity plan after it has started, you must:

    - Sign and return the cancellation form within the 30 day period, which you can find at the back of your illustration.

    - Return any income payments we may have already paid, by cheque made payable to Aviva. Please post this to the address on page 6 under the How to contact us section on your Key Features document.

    - Gain agreement from an insurance company to receive the funds so that they can provide you with an income in retirement.

    Where you have asked us to pay an adviser charge and this has already been paid it will not be refunded. If the cancellation form is not returned the annuity plan will continue.

  • For an Immediate Life Annuity:

    You have 30 days to change your mind from the date that you receive our confirmation that your income has been set up. We will enclose a cancellation form when we issue confirmation that we’ve set up your income.

    Your cancellation form will include the address to which it should be sent. Alternatively, you can contact us at the address on your Key Features Document.

    If you decide to cancel your plan, please return any income payments we may have already paid, by cheque made payable to Aviva. These should be returned with the cancellation form. We will refund any single contributions, but where you have asked us to pay an adviser charge and this has already been paid this will not be refunded.

    If rates increase during the cancellation period and the cost of buying your plan falls, we reserve the right to give back a lower amount than that which you originally paid for the Immediate Life Annuity. If the cancellation form is not returned the annuity plan will continue.

What is inflation?

Inflation is the rate of increase in the level of prices for goods and services, which affects the purchasing value of money. The rate of inflation is expressed as a percentage and in the UK the most detailed measure of inflation is the Retail Prices Index. Inflation has the power to erode the value of an investment, so any money you invest has to grow by at least the rate of inflation just to stop its purchasing power from falling.

What is the Retail Prices Index?

The Retail Prices Index (RPI) is a measure of inflation often described in terms of a shopping basket containing some 650 goods and services, chosen as indicators of price movements for a range of similar items. Find out more at www.ons.gov.uk.

How do you apply for an Aviva annuity?

Once you have made a decision, you can find out more here - how to apply.

If you need a personalised recommendation based on your personal circumstances, you should seek financial advice. We can't give you advice but we can put you in touch with an adviser who can talk to you about which financial products or investments may be right for you.

What is Value Protection?

If you die within 90 days of your plan start date, we will pay a lump sum to your estate. This will be equivalent to the fund value used to buy your annuity, minus any payments already made including tax-free cash and any adviser charge. This payment will include any guaranteed payments.

If you have a dependant named on the policy, the lump sum will only be payable if you both die within the first 90 days of your plan start date. This will be paid to the estate of the last one of you to die.

You have the option to extend Value Protection beyond the first 90 days of your plan

What is a guarantee period?

Aviva offers a minimum one year guarantee period as standard, however you can choose a longer guarantee period of up to 30 years (or 10 years With Profits Pension Annuity and Immediate Life Annuity). If you die after 90 days but within your guarantee period, we will continue to make annuity payments to your estate or dependants until the end of that period. However, this does not apply if your annuity was purchased for you by the trustees of a defined benefit pension scheme.

Want more help?

One of our team will be happy to give you a personal illustration with different options so that you can see the difference they make to your income. If you'd like advice, or information on other providers' products, you should speak to a financial adviser.

If you don't already have an adviser, you can find one in your area at www.unbiased.co.uk.

Talk to one of our team on 0800 068 3038

*Lines are open Monday to Friday 9.00am - 5.00pm. Calls may be recorded and/or monitored.

Next steps

Pension Wise has been set up by the government and offers free and impartial guidance for people retiring with defined contribution pensions. It will help you understand what your choices are and how they work.

You'll be able to get help on the Pension Wise website, over the phone or face to face.

If you are approaching retirement we recommend you get guidance or advice to help you understand your options.

Speak to a financial adviser

Nothing on this site is personalised advice or a recommendation. If you need a personalised recommendation based on your personal circumstances, you should seek financial advice. We can't give you advice but we can put you in touch with an adviser who can talk to you about which financial products or investments may be right for you.

Call a member of our team on

0800 533 5195

Monday to Friday - 9.00am - 5.00pm

For our joint protection, we may record our telephone calls. Calls are free from both land lines and mobile phones.

Alternatively, you can visit www.unbiased.co.uk to find an adviser in your local area

Call us now for more information

If you’re new to Aviva

0800 068 3038

Or if you are already a pension customer

0800 533 5195

Monday to Friday - 9.00am - 5.00pm

For our joint protection telephone calls may be recorded and/or monitored.

Our team will be happy to provide you with a personalised quote once you know which options you want.

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