Fixed Term Retirement Plan

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If you have a question about the Fixed Term Retirement Plan, have a look here to see whether we’ve answered it. If you can’t find the answer, just give us a call on 0800 404 6234 and we’ll be happy to talk things over with you.

What is the Fixed Term Retirement Plan?

It's a retirement income plan that doesn’t lock you in for life. It lets you take tax-free cash (if you haven't already), the option taking an income or both from your pension fund. It also gives you two investment options, each with a guarantee around what your plan will be worth when it matures. Depending on which investment option you choose, you can hold the plan for a minimum of five and a maximum of 10 years. You make all your choices at the start of the plan. When the plan matures, you must use your remaining pension fund to buy another retirement income product.

Once the plan has started you cannot make any changes during its term, even if your personal circumstances change. There is no cash-in value at anytime.

Are you eligible?

You can invest in a Fixed Term Retirement Plan if at the start of the plan you:

• Are between your 55th birthday and the day before your 70th birthday
• Are resident in the UK
• Have at least £30,000 to invest after taking any tax-free cash from your pension fund
• Are prepared to invest a minimum of £5,000 in either of the guaranteed maturity value or the Aviva Guaranteed Fund
• Hold a UK registered pension scheme. Please contact us for more information on the schemes we accept.

Are there minimum and maximum investment amounts for this plan?

You must have at least £30,000 to invest in this plan after you’ve taken any tax-free cash from your pension fund. Above that, you can invest as much as you like.

The minimum investment into each of the available investment options is £5,000.

Can I take a tax-free cash sum?

If you haven’t already taken tax-free cash from your pension fund, you can take up to 25% of your pension fund as a tax-free cash sum. You can only do this at the start of the plan. If you choose not to take a tax-free cash lump sum at this time, you won't be able to take it at a later date.

How long can I hold the plan for?

You can hold the plan for between five and 10 years, depending on which investment option you choose. This means that you can pick a maturity date that suits your circumstances.

How many investment options do I have?

The plan offers two investment options: the guaranteed maturity value and the Aviva Guaranteed Fund. You can invest in either or both options. The minimum investment into the whole plan is £30,000 (after any tax-free cash has been taken). The minimum investment in either the guaranteed maturity value or the Aviva Guaranteed Fund is £5,000.

How does the Fixed Term Retirement Plan work?

We'll invest your pension fund on your behalf. If you choose the guaranteed maturity value, we'll tell you at the start of the plan what your plan will be worth at maturity. If you invest in the Aviva Guaranteed Fund, the plan value will be at least the amount you originally invested when your plan matures, plus any growth the fund has experienced at the plan maturity date.

If you choose to take a fixed income from your pension fund, you'll use part of your fund to pay for this. You can then place your remaining pension fund in one or both of the low risk investment options. There is a maximum amount you can take. 'Is there a limit to the amount of income I can take?' provides further information on the level of income you can take under this plan.

Can I check how my plan is doing?

We’ll send you a statement every year to tell you how your investment is doing. If you invest in the Aviva Guaranteed fund, the value of the fund may vary from day to day, you can track your fund performance online.

With the guaranteed maturity value, your plan will be worth the value we've outlined at the start of the plan in your policy document when the plan matures.

Can I take an income from this plan?

Yes, you can. You choose at the start of the plan whether you want to take an income (within GAD limits). If you choose to take an income we'll pay this to you throughout the term of the plan. You can't make changes to the plan once it has started. This means you can't start or stop taking an income, or change the income amount part way through the term of the plan. There is a limit to the amount of income you can take, please see Is there a limit to how much income I can take? for more information.

Can I change my income after the plan starts?

No, you can’t change your mind at a later date. This means you can't start or stop taking an income, or change the income amount part way through the term of the plan. If you choose to take an income, we’ll pay your income over the entire term of the plan.

Is there a limit to how much income I can take?

Yes. The income from a Fixed Term Retirement Plan is governed by rules laid out by the Government Actuary’s Department (GAD). The rules are designed to make sure that your pension fund can pay you an income for the rest of your life, so there is a limit to how much income you can take. This is known as the GAD maximum.

If you invest using funds from which you’ve not yet taken benefits, we calculate your limit at the start of your plan and review it every three years. If you invest using funds from which you’ve already taken benefits, the timing of the GAD reviews we carry out will depend on when your last GAD review took place.

If the income you choose exceeds your GAD maximum at the review, we’ll reduce your income and place the difference in the Aviva Reserve Fund. We’ll add this to the value of your plan at the maturity date.

We'll never pay you more than the income you choose at the start of the plan, even if the GAD maximum is higher, as the income level is a set amount rather than a set percentage.

What is the Aviva Reserve Fund?

The Aviva Reserve Fund is a low risk fund we use as a holding place for any funds that are not part of your investment options or at maturity of your plan if we're unable to contact you. Although the fund aims to provide a low risk return, the value of the fund can still go down as well as up and the value of the fund at maturity may be less than the amount paid in.

We may place funds into the Aviva Reserve Fund if:

• Your plan reaches its maturity date and we’re unable to contact you, or you don't make a decision in time;
• You have excess income after a Government Actuary’s Department review;
• We receive any contributions previously known as protected rights after the start of the plan.

The Aviva Reserve Fund isn't an investment choice you can choose at the start of the plan. However, you will be able to reinvest pension funds held in the Aviva Reserve Fund at the maturity date.

Can I cash in the plan early if my circumstances change?

No, you can’t. The only exception is if we have to pay out some money from your plan because of a pension sharing order as part of a divorce/dissolution of civil partnership settlement.

What happens if I die before the plan matures?

If you die before the plan ends the amount your dependant(s) receive will depend on which option(s) you chose at the beginning, and may be subject to tax.

The guaranteed maturity value option will pay out the amount originally invested. The Aviva Guaranteed fund (and any funds held in the Aviva Reserve Fund) will be valued on the date we are told of your death - which could be less than you originally invested.

Also if there are any outstanding payments owed to you these will be added to the value (we'll reduce the amount of these to reflect the fact that we're paying the income early as one lump sum).

We'll pay the value of your plan to your dependant(s) or your estate once we've received all the evidence we've asked them to provide. Alternatively, your dependant(s) can set up a dependant's Fixed Term Retirement Plan, or choose to buy a retirement income product from the remaining value of your pension fund rather than take a cash sum.

For further details, please refer to the Key Features (PDF 256KB).

What happens when the plan matures?

We’ll contact you before your plan ends to let you know what your options are. It’s likely that you’ll be able to:

• Choose to invest in another Fixed Term Retirement Plan (as long as you are still eligible)
• Transfer the value at maturity to another retirement product such as an annuity or income drawdown.

How many Fixed Term Retirement Plans can I take out?

If you're investing using a pension fund or pension funds from which you haven’t taken any benefits, you only need to take out one plan, as you can transfer all your funds into a single plan at the same time. You can hold more than one plan if you want to start them at different times. You can’t transfer any money into an existing plan.

If you’re investing using a pension fund or funds from which you’ve already taken benefits, you will have to set up a separate plan for each fund you want to transfer.

What are the tax rules?

You won’t get any further tax relief on the pension fund you transfer into this plan from another pension scheme or arrangement.

Your fund will grow free of UK income and capital gains tax. We pay corporation tax on any dividends we receive into the investment funds from UK shares.

You may pay income tax under PAYE rules on any income you get from the plan. This will depend on your total income and your personal circumstances.

Tax law and practice may change in the future, which could affect how much tax you have to pay.

Further details can be found in the Key Features (PDF 256KB).

How can I apply?

You can only invest in a Fixed Term Retirement Plan through a financial adviser. You should check first whether you’re eligible for the plan.

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WC04054 04/2012