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Pensions & Retirement

Compare your retirement options

If you're about to retire, it makes sense to check the options you have for turning your pension fund into a retirement income. At Aviva, we have an option to suit most people.

You can choose from three retirement options:

  • Annuities: An annuity provides you with a guaranteed income for life when you retire. You buy an annuity using a lump sum from your pension fund or, perhaps, some savings. You can normally take tax-free cash (if you haven't already) with an annuity bought using your pension fund.
  • Fixed Term Retirement Plan: This is a retirement income plan that you can hold for a fixed term of between five and ten years. It lets you take tax-free cash (if you haven't already), the option of an income or both from your pension fund and provides a guarantee around what plan value will be on maturity. You must use your remaining pension fund to buy another retirement income product when the plan matures.
  • Income Drawdown available through Aviva Platform Pension Portfolio: This is a way of taking an income and tax free cash (if you haven't already), if you wish, from the money you've built up in your pension fund, while leaving the rest invested. The invested fund has the potential to grow free of UK income and capital gains tax, but its value can go up and down, and may be worth less than the amount invested.

We strongly recommend that you ask a financial adviser to help you assess which option is best for you. With some products you can't change your mind at a later date, so it's important that you take some time to make the right decision.

In the meantime, here's a quick comparision of three of the retirement options available from Aviva. Information about our other products, including immediate life annuity and with-profits annuity is available on this site or by calling 0800 056 1643. Alternatively you can talk to a financial adviser. If you don't have an adviser, you can find one near you at www.unbiased.co.uk.

Pension annuity Fixed Term Retirement Plan from Aviva Income drawdown
Is my income guaranteed for life? Yes No No

Pension annuity: You use your pension fund to provide a guaranteed income for life.

Fixed Term Retirement Plan: You'll receive an income for the term of the plan, if selected, not for life. When the plan matures, you must use the remaining pension fund to buy another retirement income product.

Income Drawdown: You'll receive an income, if selected, but it won't be guaranteed for life.

Can I take tax-free cash? Yes Yes Yes

Pension annuity: You can normally take up to 25% of your pension fund as tax-free cash, if you haven't done so already.

Fixed Term Retirement Plan: You can take up to 25% of your pension fund as tax-free cash provided you haven't already taken any.

Income Drawdown: You can normally take up to 25% of your pension fund as tax-free cash (if you haven't already), and could also use 'phased drawdown' to provide a regular tax-free income using your tax-free cash entitlement.

Can I vary my income? No No Yes

Pension annuity: You can choose at the start whether you want to recieve a income level that keeps pace with inflation, remains level throughout, or one that rises by a set percentage every year. Once your income payments start, you can't change your mind about the choices you've made.

Fixed Term Retirement Plan: You can choose how much you want to receive at the start of the plan, within limits set by the Government Actuary's Department (GAD). You'll receive this amount and won't be able to change it through the term of the plan. It won't change unless your income has to be reduced under government rules.

Income Drawdown: You can vary the income you draw at anytime within GAD limits.

Can I leave money for my dependants? Yes Yes Yes

Pension annuity: You can set up your annunity to pay an income to your spouse, civil partner or dependant when you die. You can also take out a guarantee that your annuity will continue to pay an income for a certain length of time even if you die within that length of time.

Fixed Term Retirement Plan: If you die before the plan matures, your dependants can use the remaining pension fund to provide an income from a retirement income product (including a further Fixed Term Retirement Plan, if eligible) or take it as a cash sum (subject to a tax charge of 55%). The value of the fund on the date we are told of your death will depend on your original investment choice.

Income Drawdown: If you die, your dependants can use your pension fund to provide an income or take it as a cash sum (subject to a tax charge of 55%).

Will I be able to change where I invest? No No Yes

Pension annuity: You use your pension fund to buy a pension annuity, it is not an investment.

Fixed Term Retirement Plan: You can't change your investment options once the plan has started.

Income Drawdown: You can usually change your investments at any time.

Will my plan receive investment returns? No Maybe Yes

Pension annuity: Your plan won't receive any investment returns as a pension annuity is not a type of investment.

Fixed Term Retirement Plan: If you invest in the Aviva Guaranteed Fund, we guarantee that at maturity your pension fund will be at least what you originally invested plus any growth the fund has experienced over the term of your plan. With the guaranteed maturity value option the amount paid out on maturity is set out at the start of the plan.

Income Drawdown: Your pension fund may benefit from any growth the funds you're invested in have experienced. Any growth will be free from captial gains and income tax. However, you must bear in mind that there is a risk that returns could be lower than expected and consequently provide you with a lower pension income than if you'd bought an annuity at the start.

What is the minimum pension fund needed? £10,000 £30,000 £50,000

Pension annuity: £10,000 minimum after taking any tax-free cash and any adviser charge is paid.

Fixed Term Retirement Plan: £30,000 minimum after taking any tax-free cash and any adviser charge is paid.

Income Drawdown: Usually £50,000 after taking any tax-free cash and any adviser charge is paid.

Can I change my mind later? No Yes Yes

Pension annuity: You can't make any changes to it once it starts.

Fixed Term Retirement Plan: You have to invest for the term of the plan and you can't make any changes to the plan once it starts, but you aren't locked in for life. When the plan matures you must use your remaining pension fund to buy another retirement income product (including a further Fixed Term Retirement Plan, if eligible).

Income Drawdown: You can stop using income drawdown at any time and use your pension fund to buy another retirement income product, at any time. If you intend to use income drawdown for a short term, in the hope that annuity rates will rise in the future, you should be aware that they could also fall and the rates available may be worse than they are currently.

If you have questions, you'd like help comparing the products or you want to know more about one particular product give us a call on 0800 056 1643 during these hours:

Monday, Tuesday 8.30am - 7.00pm
Wednesday, Thursday 8.30am - 6.30pm
Friday 8.30am - 5.30pm

Please bear in mind that we can only give you information about our own products. To help us improve our service, we my record or monitor any calls we receive.

If you'd like to talk to a financial adviser, you can use www.unbiased.co.uk to search for one in your area.

WC03052 09/2013