Income Drawdown

Income drawdown allows you to take an income directly from your pension fund while leaving the remainder invested for potential further growth.

• It allows you to take control of how and when you receive your retirement income, so you can retire fully or semi-retire
• You can choose from a range of investments, but remember the performance of the investments will affect the income you receive
• Talk to your financial adviser and find out how to apply for an income drawdown plan.

What is income drawdown?

Income drawdown is a way of taking an income from the money you've built up in your pension fund. You can designate some or all of your pension fund to be used to provide your income, which is subject to maximum limits set by the Government.

While you're taking withdrawals from your pension fund, the remainder of your fund continues to be invested, giving it the potential for growth, free of UK income and capital gains tax. Corporation tax is paid on dividends received from UK shares. However, the value of the fund can go down as well as up and is not guaranteed.

How does it work?

You can choose to take income from your pension fund from age 55. You can usually take a tax-free cash lump sum, normally up to a maximum of 25% of the fund value, each time you ‘crystallise’ some of your pension fund into income drawdown.

The Government sets a maximum limit of how much you can take as income in any 12-month period through income drawdown. However, there's no set minimum, which means you could actually delay taking an income if you want to and simply take your tax-free cash lump sum. The amount of yearly income you take must be reviewed at least every three years (annually once you reach age 75).

What are the benefits?

• Income choices. Aviva's income drawdown plans give you a choice of how to take money from your pension fund, allowing you to take control of how and when you receive an income. This includes the option to take withdrawals from contracted-out (or "Protected Rights") funds, and also the option to take a tax-efficient pension income by using your tax free cash entitlement to pay a regular income, through phased drawdown.
• Investment choices. Our plans offer you a wide selection of investment options, to enable you to tailor your choices to your individual investment needs. We have plans that offer a range of 250 funds, right up to our Self Invested Personal Pensions (SIPPs) which allow you to invest in over 1500 different funds, plus stocks and shares and commercial property if you wish.
• Tax-efficiency. Aviva's income drawdown plans all allow your money the potential to grow free of UK income and capital gains tax. Corporation tax is paid on dividends received from UK shares.
• Charges. We take charges from your fund each month and you can clearly see what they are. The charges cover the cost of advice, fund management and administration throughout the life of your plan. A fund manager expense charge may apply to some funds. It covers the fund manager's expenses connected with buying, selling, owning and maintaining the assets and is taken, generally each day, by reducing the unit price of the fund.

Please note that this information is based on our understanding of current tax laws. The laws relating to tax may change in the future.

Things to think about

• The performance of the investment funds will have an impact on the amount of income you receive. If the investments perform poorly, the level of income may not be sustainable.
• If you decide at a later date to buy an annuity, you may receive a lower level of income from that annuity.
• An annuity may be a more suitable option if you want the security of a guaranteed income for the rest of your life.
• Income drawdown is usually a more expensive option than annuity purchase.

Is an income drawdown plan right for you?

Aviva’s income drawdown plans may be suitable for you if you're aged over 55 and you have a minimum of £50,000 in your pension fund(s).

You must discuss your retirement options and take advice from your financial adviser before taking out an income drawdown plan with Aviva. If you're not sure whether it's the right plan for you, we can help you decide.

What are the charges?

There are charges that Aviva take for managing your plan, and there may also be charges for managing the funds or investments you choose to invest in. Your financial adviser is also likely to make a charge to cover the cost of their advice.

Other useful information

• Find the answers to some frequently asked questions
• Understand your attitude to risk/return and which funds might suit you best

How to apply

Find out more about how to apply for one of Aviva's income drawdown plans. The first step is to talk it through with your financial adviser to make sure it's the right type of retirement income plan for you. If you don't have an adviser, you can find one in your area at www.unbiased.co.uk.

WC03043 10/2011