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A

Advance payments
This means that we will start paying you your income on the date that your annuity is set up.
Adviser charge
This is the payment you have agreed to pay to your financial adviser for the advice and services they have provided to you.
Annuity
An annuity is an income that will be paid to you for the rest of your life. You use money in your pension fund to buy a pension annuity. You can't generally change or cash in your annuity even if your personal circumstances change.
Annuity rates
This determines the level of income you will receive from your annuity. Annuity rates fluctuate, but, once you buy your annuity, the rate you receive is fixed.
Arrears payments
This means your income will start to be paid one month, quarter, half-year or year from the date your annuity is set up and will be paid at the end of each payment period.
Aviva
Aviva includes any former companies that are now part of the Aviva group, such as Norwich Union and Provident Mutual.

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C

Company pension
This is a pension scheme set-up by your employer. Your employer may make payments into the scheme on your behalf and may ask you to contribute too.

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D

Defined benefits
A pension scheme where the level of benefits that the members are entitled to is known in advance. The value of the benefits is linked to the member's salary, either throughout their career or at the time of leaving. A final salary scheme is a common type of defined benefit pension scheme.
Dependant
This could be your spouse, partner, civil partner, a child aged under 23 or a financially dependant physically or mentally impaired adult.
Dependant's income
The income paid to your dependant when you die.

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E

Enhanced benefit
Enhanced benefits can offer a higher income to people with certain medical and lifestyle conditions that affect their life expectancy.
Escalating annuities / inflation-linked annuities
An escalating annuity is one where your income rises by a set amount, usually between 3% and 5% each year. An inflation-linked annuity tracks the UK Retail Prices Index and will rise if the index rises. Choosing this option means you will get a lower initial income than if you chose a level annuity.
Estate
All of your possessions, including all the property, assets and debts left when you die.

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F

Financial adviser
A financial specialist who can help you make a decision about the best financial solution for you. Some advisers can only advise on one company's products, others can advise on a range of companies' products. Independent financial advisers can advise you on the products offered by all companies. Advisers have to tell you what product range they cover before they offer you any advice.
Fixed Term Retirement Plan
A retirement income plan from Aviva, that doesn’t lock you in for life. It lets you take tax-free cash (if you haven't already), 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. There is no cash-in value at any time and you cannot make any changes during the term of the plan, even if your circumstances change. When the plan matures, you must use your remaining pension fund to buy another retirement income product. Find out more about our Fixed Term Retirement Plan.

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G

Government Actuary's Department (GAD) maximum
This is the maximum amount of income allowed under Government rules. It’s a specified percentage of the GAD limit. The GAD maximum amounts allowed under HMRC rules may change.
Guaranteed Fund
An investment option from Aviva available through our Fixed Term Retirement Plan. This option provides a guarantee that your plan will be worth at least what you originally invested plus any growth the fund has experienced at the plan maturity date.
Guaranteed maturity value
An investment option from Aviva available through our Fixed Term Retirement Plan. This option provides a guaranteed value at the plan maturity date.
Guaranteed payments
We will pay your income for a set period of time even if you die.

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I

Income drawdown
Income drawdown is a way of taking income from your pension fund while leaving the remainder of your fund invested for further potential growth. Even if you have a large pension fund and other assets or income, income drawdown may still be unsuitable for you. It depends very much on the risks you're prepared to take and how actively you want to manage your retirement fund and income.
Increasing payments
Your payment increases by a fixed percentage or in line with the UK Retail Prices Index, or Average Weekly Earnings Index.
Inflation
This is the increase in the cost of living over time. Inflation means that the value of money reduces over the years. So, if you choose a level annuity, over time it will gradually buy you less and less, as the price of everything else increases.
Inflation-linked annuities
An inflation-linked annuity tracks the UK Retail Prices Index and will rise if the index rises. Choosing this option means you will get a lower initial income than if you chose a level annuity.
Investment-linked annuity
This type of annuity offers the option of investing money from a pension fund into a with-profits fund or other Investment funds. Instead of basing the income solely on annuity rates the level of income from an investment-linked annuity depends on the performance of the investment funds chosen. This means that the level of income can go down as well as up and isn't guaranteed.

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J

Joint life annuity
´╗┐An annuity which makes sure your spouse, civil partner or dependant will continue to receive an income should you die before them. This could be at the same or a reduced level. If you choose this type of annuity, the other person may still be entitled to the income even if you divorce or dissolve your civil partnership.

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L

Level annuity
An annuity where the level of income stays the same for life. This is likely to be effected by inflation over time.
Lifetime allowance
The lifetime allowance is a limit on the total amount of pension fund you can use for retirement benefits before extra tax applies. It is set by the Government. The limit for 2013/2014 is £1.5 million and 2014/15 is £1.25 million. The vast majority of pension scheme members will not be affected by this limit.

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M

Market value reduction (MVR)
A market value reduction may be applied to unitised with-profits investments. A market value reduction is a way of protecting investors during periods when investment returns are below the level we would normally expect or following a large or sustained fall in the stock market. We apply a market value reduction to ensure that those who remain invested in a with-profit fund are not disadvantaged when others choose to leave. If you move money out of the fund when a market value reduction is in place it will reduce the value of your pension fund. We will tell you if a market value reduction is applying before taking your money out of the fund.
Mortality
Mortality refers to the number of deaths within a known group, within a given period. Some people will die earlier than expected and others will live longer than expected.

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N

Normal/nominated retirement date (NRD)
The date you told your pension provider that you would like to retire. This may be a set date for a company pension.
Non-protected rights
The total value from all payments into your pension fund that was not 'protected rights' monies. Please see the definition of protected rights below.

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P

Pay As You Earn (PAYE)
This is a method of paying tax. Income tax and National Insurance contributions (when appropriate) are deducted from your salary and/or pension income before you receive it and are paid directly to HM Revenue & Customs.
Pension Annuity
You can use the money from your pension fund to buy an annuity, which gives you an income for life.
Pension fund
This is a term given to the pot of money you build up in your pension plan, from payments paid into it by you and/or your employer during your working life. You use it to provide an income when you retire.
Personal pension
This is a pension plan you personally hold and invest in. With a personal pension, you pay a regular amount (usually every month) or a lump sum to the pension provider, who invests it as requested, on your behalf. Your employer may also pay into your personal pension.
Pension provider
A company which runs a pension scheme.
(Former) protected rights and non-protected rights (PR)

Protected rights refers to the money built up with rebate payments from the Government when a person has contracted out of the State Second Pension.

Note: From 6 April 2012 the Government stopped the ability to contract out for defined contribution schemes, and the restrictions on how Protected Rights can be used have been removed.

Purchased Life Annuity/Immediate Life Annuity
We refer to this product as our Immediate Life Annuity. This is an annuity bought with money from other sources (such as savings, investments, an inheritance or tax-free cash from your pension fund).

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R

Retail Prices Index
The UK Retail Prices Index (RPI) is an official measure of inflation.

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S

Serious medical condition
You may be entitled to an enhanced annuity if you have a serious medical condition. Serious medical conditions include illnesses like diabetes, cancer, stroke and heart disease.
Single life annuity
An annuity which is paid only to you and stops when you die, unless you choose guaranteed payments.
Smoothing
Smoothing is only used for with-profits investments. The with-profit fund invests in a wide range of assets and the performance of these assets contribute to the profits and losses of the fund. Instead of simply sharing out what the fund makes or loses each year, smoothing aims to even out some of the variations in performance. With smoothing we keep back some of the returns the fund earns in good investment years and use them to help pay bonuses in poor investment years. Losses made in poor investment years may also reduce returns in good investment years. There may be times, however, when smoothing can't fully protect your investment. This can happen following a large or sustained fall in the stock markets or when investment returns are below the level we normally expect. In these circumstances, for unitised with-profits investments we may apply a market value reduction.
State benefits
You may be able to claim benefits from the government during your retirement. These include the Winter Fuel Payment, Cold Weather Payment and Pension Credit.
State Pension
The State Pension is paid by the government and is made up of two parts, the 'Basic State Pension' and the 'Additional' or 'State Second Pension'. Nearly everyone can expect to get a Basic State Pension when they reach state pension age. The State Second Pension is the additional pension that the government provides on top of the Basic State Pension. Prior to April 2002, the Additional Pension was called the State Earnings-Related Pension Scheme (SERPS). Before 6 April 2012 the government used to allow people to opt out of the State Second Pension. This was known as 'contracting out'. By contracting out the government paid some of a person's National Insurance contributions into a personal or occupational pension plan. It is still currently possible to be contracted out by being a member of a contracted out salary related occupational pension scheme.

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T

Tax-free cash
You can normally take up to 25% of your pension fund as tax-free cash. Taking this will reduce the income you have during retirement.
Terminal illness
A terminal illness is one where the individual is diagnosed as suffering from an advanced or rapidly progressing and incurable condition which is, in the opinion of our Chief Medical Officer, likely to lead to the individual's death within 12 months.
Triviality
If your pension fund is small, you may be able to take it all as a cash sum rather than having to use it to buy an annuity. This is known as the triviality or commutation option. You have to be over the age of 60 and Aviva will only pay triviality up to the age of 75. The total value of all your pension plans, including those already being paid has to be below an amount set by HM Revenue & Customs. Currently this is £30,000. The first 25% of this amount can usually be taken tax-free and the remainder will be subject to income tax. Read our 'Can I retire after I'm 75?' FAQ for more information.

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W

With-profit fund
A with-profit fund invests in a range of assets such as equities (company shares), property, gilts (loans to the UK government), corporate bonds (loans to companies) and cash & cash alternatives. By investing in a range of assets the fund aims to achieve balanced returns over the medium to long term. A with-profits investment has the advantage of pooling your money with other investors to enable you to benefit from investing in a wider range of assets. The value of your investment depends on the mix of assets in the with-profits fund and how each asset performs. The profits and losses of the fund are shared out to investors through a system of bonuses using a process called 'smoothing'. In deciding bonuses we aim to smooth the returns over the long term.
With Profits Pension Annuity
A with-profits annuity from Aviva that's guaranteed to pay an income for life after you retire. This type of annuity is linked to the performance of our With-Profits Fund. This means that although the level of income can go down as well as up, it's guaranteed not to fall below the minimum level selected at the start of the plan. Find out more about our With-Profits Pension Annuity.

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X

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Y

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Z

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WC04025 04/2014