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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:

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:

When should you buy an annuity?

You normally use your pension fund to buy an annuity when you retire, to replace the income you received when you worked. There are exceptions - such as our Immediate Life Annuity, which you buy with a cash lump sum rather than money in a pension fund. This could be money you held in another investment, money you inherited or tax free cash you received from your pension fund.

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 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.

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.

Please see your terms and conditions or contact your financial adviser for further information and exclusions which may apply to the above.

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 within 30 days from the date you sign the application form. If you cancel during the 30-day period, we'll refund any payments. The refunded payments may be less than the amount paid to buy your retirement benefits if our annuity rates have changed. Any adviser charge we have already paid to your adviser will not be refunded by Aviva.

    If you exercise your right to cancel, we'll refund any payments to your previous provider or pension scheme only when any annuity payments already made and any tax-free cash lump sum you've taken have been returned.

    You must also gain agreement from the transferring pension scheme that they are willing to accept the pension funds back. If the pension scheme will not accept this, it is your responsibility to gain agreement from another insurance company to receive the funds.

  • For a With Profits Pension Annuity

    You can change your mind within 30 days from the date you sign the application form. If you cancel during the 30 day period, we'll refund any payments. The refunded payments may be less than the amount paid to buy your retirement benefits if our annuity rates have changed. Any adviser charge we have already paid to your adviser will not be refunded by Aviva.

    If you exercise your right to cancel, we'll refund any payments to your previous provider or pension scheme only when any annuity payments already made and any tax-free cash lump sum you've taken have been returned.

    You must also gain agreement from the transferring pension scheme that they are willing to accept the pension funds back. If the pension scheme will not accept this, it is your responsibility to gain agreement from another insurance company to receive the funds.

    At any time after the first year you can change the Anticipated Bonus Rate within the limits in force at the time or convert your plan to a conventional Pension Annuity. In both cases, we'll recalculate your pension income.

  • For an Immediate Life Annuity:

    You can change your mind within 30 days from the date you receive the “Your right to change your mind“ document. If the cost of buying your plan has fallen, you'll only get back this lower amount.

    If you exercise your right to cancel, any single contributions will 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 which you paid for the original Immediate Life Annuity. Any adviser charge we have already paid to your adviser will not be refunded by Aviva.

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?

If you think that one of our annuities is right for you, you can find out more here - how to apply. If you need help deciding which annuity or options are most suitable for you, you should talk to a financial adviser. If you don't already have an adviser, you can find one in your area at www.unbiased.co.uk.

What is Value Protection?

If you die within 90 days of your plan start date, and any dependant named on the policy dies before you, we will make a payment to your estate. This will be equivalent to the value of your annuity, minus any payments already made. This payment will include any guaranteed period payments.

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 10 years. 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 8.30am - 7.00pm, Saturday 9.00am - 5.00pm. Calls may be recorded and/or monitored.

WC01026 02/2013

Contact us

For new policy enquiries or information on our products please call

0800 068 3038

Monday to Friday
9.00am - 6.00pm
Saturday
9.00am - 2.00pm
Sunday
Closed

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

Or, arrange for us to call you back at a convenient time.

Existing Customers

If you are an existing Annuities customer, please call

0800 068 6800

Monday to Friday
8.30am - 5.30pm
Saturday
8.30am - 2.00pm

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

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