Contrary to popular belief, you won't necessarily get an income from your pension fund. Unless you have a defined benefit pension plan, such as a final salary scheme, you will need to use your pension fund to buy another product that will give you a regular income throughout your retirement. For many people, this is an annuity. For others, this could be income drawdown or a fixed term retirement plan.
An annuity is a retirement income plan. You buy it with the money from your pension fund and it will give you an income for the rest of your life. The amount you receive depends on:
You can also choose to provide an income for a dependant when you die.
There are different types of annuities, offering you a number of options. Please read our annuities section if you want to know more about annuities and how they work.
One of the first things you need to know is how much income you could get.
If you have decided what annuity is right for you and want to buy one, why not read our buying an annuity section.
If you only have a small pension fund, you may be able to take it as a lump sum. This is known as the triviality option. You can read more about this in the frequently asked questions section.
Buying your retirement income is an important decision, we strongly recommend that you talk to a financial adviser before you do anything. For advice and information on your retirement options and annuities, contact your financial adviser. Don't have a financial adviser? Find one near you at www.unbiased.co.uk.
You can speak to one of our team for information about annuities by calling 0808 256 5442. Or you can arrange for us to call you back at a time that suits you.
Most people think that their pension fund will start paying them an income when they retire. This isn't true, unless you are in a defined benefits scheme. You must use your pension fund to buy another product - usually an annuity - that will pay you an income throughout your retirement.
Tax-free cash is money you can take as a lump sum from your pension fund without having to pay tax on it. You can spend this money on anything you want. You can usually take up to 25% of your pension fund as tax-free cash, although this may not be the case for everyone. For example, lump sums from final salary schemes are calculated differently. For the vast majority of people, tax-free cash will be a feature of their pension plan, but you should check with your pension provider what the rules are for your pension fund. You should also bear in mind that taking tax-free cash reduces the amount you can use to provide an income during your retirement. With Aviva this has to be taken by age 75. Read our 'Can I retire after I'm 75?' FAQ for more information.
If you have more than one pension fund and have already taken tax-free cash from one of those funds, you won't be able to combine that fund with any other pension funds you have. We can give you a quote for each individual fund and you will be able to take tax-free cash from the funds that you haven't yet taken money from. You can also combine any funds that you haven't taken tax-free cash from and get a quote for these funds. It is not always possible to combine your pension funds, please see ‘When is it not right for me to put all of my pension funds together?' FAQ.
If you have any queries or need further information about our products, talk to a member of our team by calling 0808 250 7935.
If you want financial advice, please contact your Financial Adviser. If you don't have a Financial Adviser you can find one via www.unbiased.co.uk.
You can choose to provide an income for your dependant if you die before them. This may reduce your income. A dependant could be your spouse, civil partner or a financially dependent adult.
If the total value of all your pension(s), including those already being paid, is lower than a limit set by the government, you may be able to take it all as a cash lump sum, rather than having 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. For details of the triviality level set by the government please visit www.hmrc.gov.uk. Up to 25% of any triviality payment is tax free, with the remainder being subject to tax in accordance with your PAYE rates.
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