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Personal Pension

Frequently asked questions

It's important to understand all the facts about our Personal Pension before you take out your plan. So, we've put together some easy-to-follow frequently asked questions and answers:

Are you eligible for an Aviva Personal Pension?

To be eligible for an Aviva Personal Pension plan you need to be under 75 years of age, eligible for tax relief on the payments you make and resident in the UK. You're classed as 'resident' if you live in the UK all or most of the time – if you're not sure, you can ask your local tax office. You may also be eligible if either you or your spouse/civil partner works overseas for the UK Government.

If you do take or have taken out an Aviva Personal Pension, you need to tell us if:
  • You stop being resident in the UK
  • You stop having earnings subject to UK Income Tax
  • You or your spouse/civil partner stop working for the UK Government overseas
  • You move abroad or start working abroad

To amend your personal details:

Call us on 0800 068 6800

As all of these may affect what you can pay.

You need to take advice from your financial adviser before taking out an Aviva Personal Pension plan to make sure it's right for you. If your employer has a company pension scheme that you are able to join, you should always consider your employer's scheme first and discuss this with your financial adviser.

What would you get from the State Pension?

If you are single, a married man or woman or civil partner (who qualify with their own National Insurance contributions) you'd receive just £115.95 maximum a week from the Basic State Pension in the current tax year (2015/16), or as a married man, woman or civil partner (using his wife's, her husband's or their civil partner's National Insurance contributions record) you would get a total between you of £185.45 per week.

If you are, or have been, employed you may also qualify for a combination of the State Earnings Related Pension Scheme (SERPS) and the State Second Pension (S2P). This isn't available to those who have been self-employed for all their working life.

The actual amount of Basic State Pension, SERPS and S2P you receive will depend on the National Insurance contributions you've paid during your working life. However, there's likely to be a large gap between your income before retirement and the State Pension you receive when you retire.

The good news is that starting a Personal Pension with Aviva will not affect your entitlement to the Basic State Pension.

If you're a pensioner living in Great Britain, Pension Credit would top up your weekly income to a guaranteed minimum of (for the 2015/16 tax year):

  • £151.20 if you are a single person
  • £230.85 if you are claiming as a married couple or civil partners.

In addition, you may get Savings Credit, if you or your partner are over age 65 and you have saved some money towards your retirement. The Savings Credit can be up to £14.82 a week if you're single, or £17.43 a week if you have a partner. For further details please visit gov.uk

Is an Aviva Personal Pension the same as a stakeholder pension?

They are not the same, as an Aviva Personal Pension doesn't meet the criteria set by the Government relating to minimum contributions, charges and terms and conditions that stakeholder pensions must comply with.

Your financial adviser will be able to advise you on which pension plan is right for you.

What are the charges?

If you and your adviser decide that this plan is right for you, we'll provide you with detailed information on the charges in your personal illustration.

Product Charges

We apply an Annual Fund Charge (AFC) for managing your plan.

  • Additional charges apply to some funds. These may include an additional yearly charge and/or a fund manager expense charge. Charges are fund specific. You can find full details at our fund centre.

For new plans, we currently discount the Annual Fund Charge if your pension pot grows above £20,000. The discount is 0.25% if the value of your pension pot is between £20,000 and £49,999. And if it grows to £50,000 or more, the discount is 0.3%.

Adviser Charges

The cost of advice can be paid for through the plan, using our Adviser Charge options - your adviser will give you details about the cost of advice.

How much can you invest?

You can start an Aviva Personal Pension plan with as little as £200 per month or you can make a one-off payment starting from £10,000. If you make further payments you can choose to make one-off payments of £1,000 if you pay in £200 or more a month. Or you can make a one-off payment of £10,000 or more and choose to pay a minimum regular payment from £20 per month. All amounts shown are inclusive of tax relief and regular or one-off payments can also be made by your employer, if you have one.

HM Revenue & Customs sets the maximum amount that you can pay into your pension plans and still receive tax relief. We only accept payments that qualify for tax relief. The tax relief limits are 100% of your annual earnings or £3,600 (inclusive of tax relief) if greater.

There is a payment limit each year, which is called the annual allowance. If total payments to all your pension plans are more than the annual allowance, you will normally have to pay tax on the excess. For 2015/16 tax year the annual allowance is £40,000.

Taking certain types of retirement benefit will trigger the reduced money purchase annual allowance (MPAA). You will still have an annual allowance of £40,000 in total, but no more than £10,000 can be paid into a defined contribution (money purchase) pension and £30,000 for other pension savings. The provider paying your retirement benefits will tell you if this applies to you.

If you or your employer make payments above the Annual Allowance, you may be subject to a tax charge. Any statement about tax liability is based on our understanding of current law and tax practice. Future changes in law and tax practice could affect how much your plan is worth and your tax liability. Your plan could also be affected by changes in your personal financial circumstances.

You can make regular monthly or yearly payments into your Aviva Personal Pension. This is normally done by direct debit from your bank or building society account. You can also make one-off payments at any time, which could include money you've moved from another pension scheme.

If you want to stop making payments for a while you can take a payment break for up to 12 months after which payments will continue as before. If you need to stop making payments altogether (for example, if you have left work to raise a family) you can then choose to restart them at a later date. Stopping payments will affect how the pension pot grows and charges will still be deducted. You can also choose to increase your payments every year in line with the Average Weekly Earnings Index, the minimum increase is 3% and the maximum is 15% of the amount you pay regularly by direct debit.

What are the tax rules?

HM Revenue & Customs (HMRC) set limits on the amount of money you can build up in all your pension plans whilst still benefiting from tax relief:

  • Tax relief - There's no limit on the amount that you can pay into your personal pension and any other pension plans you have, but you won't get tax relief on payments over a certain amount. HMRC allows tax relief on your personal payments to your pension plans of up to £2,880 a year (which would become £3,600 with tax relief), or 100% of your UK taxable earnings if greater. Aviva won't accept payments from you that don't qualify for tax relief.
  • Annual Allowance - There is a payment limit each year, which is called the annual allowance. If total payments to all your pension plans (including any payments from your employer) are more than the annual allowance, you will normally have to pay tax on the excess. For 2015/16 tax year the annual allowance is £40,000.

    Taking certain types of retirement benefit will trigger the reduced money purchase annual allowance (MPAA). You will still have an annual allowance of £40,000 in total, but no more than £10,000 can be paid into a defined contribution (money purchase) pension and £30,000 for other pension savings. The provider paying your retirement benefits will tell you if this applies to you.

  • Lifetime Allowance - The Lifetime Allowance is £1,250,000 for the 2015/2016 tax year. As well as the amount you're currently building up in pension plans, the Lifetime Allowance will also take into account the value of retirement benefits already being paid to you as income and most paid as lump sums. If you already have pension pots that exceed the Lifetime Allowance or you think may exceed it in future, you should talk to a financial adviser before taking out a personal pension.

Any statement about tax liability is based on our understanding of current law and tax practice. Future changes in law and tax practice could affect how much your plan is worth and your tax liability. Your plan could also be affected by changes in your personal financial circumstances.

How do you get tax relief?

You make your payments, less an amount equal to the basic rate of Income Tax. Aviva then claims this back from HM Revenue & Customs (HMRC) on your behalf and adds it to your plan, together with the amount you have paid. This is often referred to as making payments net of basic rate tax. For example, if basic rate tax is 20% and you pay £160 into your plan, HMRC will add £40 to this, so the total invested is £200. This is known as basic rate tax relief.

If you pay Income Tax at a rate higher than the basic rate, the payments made into your plan will only be increased by basic rate tax relief, but you will be able to claim higher rate tax relief on your annual self-assessment tax return.

Any statement about tax liability is based on our understanding of current law and tax practice. Future changes in law and tax practice could affect how much your plan is worth and your tax liability. Your plan could also be affected by changes in your personal financial circumstances.

What choices will you have when you take your retirement benefits?

You can not normally take your benefits until you are at least aged 55 and under this plan, Aviva requires you to do this by age 75.

You can choose to take your retirement benefits in one of the following ways :

  • take your pension pot as a cash lump sum. The first 25% will be paid tax free, but you will pay tax at your marginal rate on the rest of your pension pot.
  • take your money as and when you need it (although this will mean transferring your money to a different type of pension plan)
  • use your pension pot to buy an income for life. The income you get will depend on the size of your pension pot and the cost of converting it.
  • You don't have to use the whole of your pension pot at once.

You'll find plenty of information on these options and more by visiting our approaching retirement site.

There may be other options available when you are ready to take your retirement benefits; please speak to your Financial Adviser to find out more.

You don't have to take your retirement benefits with Aviva, of course we hope you stay with us but you're free to choose another company if you wish.

You may have to pay income tax on the retirement benefits you take from your pension plan. Income payments and lump sum payments are both treated as income, and therefore the tax you pay will depend on your personal circumstance and may be subject to change.

Any statement about tax liability is based on our understanding of current law and tax practice. Future changes in law and tax practice could affect how much your plan is worth and your tax liability. Your plan could also be affected by changes in your personal financial circumstances.

What if you have an existing pension plan?

If you've had more than one employer during your working life, then you may have built up benefits in several company pension schemes. You may also have taken out a private pension of your own. If so, you may carry on paying into your private pension as well as taking out a personal pension plan. In most cases, you can also move the money that you've built up in other pension schemes into an Aviva Personal Pension plan.

Bear in mind that not all pension schemes work in the same way, so moving any existing pension pots into your new plan may not always be the best thing for your own personal circumstances. We recommend that you talk to a financial adviser before deciding to move an existing pension plan.

Any statement about tax liability is based on our understanding of current law and tax practice. Future changes in law and tax practice could affect how much your plan is worth and your tax liability. Your plan could also be affected by changes in your personal financial circumstances.

What happens if you die before you start taking your retirement benefits?

If you die before you start taking the benefits from your pension plan, we'll normally pay the full value of your pension pot as a lump sum. The value of the pension pot may be worth less than has been paid in. You can specify the person or people you would like to receive all or part of a lump sum and this will help us to pay out more quickly. You can change the people named at any time by writing to us. Your wishes are not binding, but we will bear them in mind when making the payment.

If you prefer, you may be able to set up your own individual trust, so that we pay any lump sum to trustees appointed by you. We can provide you with a trust form or you can use your own - we'll need to see the original or a certified copy of the completed trust form. We recommend that you see a solicitor before setting up a trust.

Instead of your fund being paid out as a lump sum, it can be used to give an income to someone you choose. This can be provided as income directly from the pot, or by purchasing an annuity for that person.

Lump sums and funds used to provide income benefits on death will count towards your lifetime allowance.

You'll find more information about the Lifetime Allowance in the FAQ 'What are the tax rules?'.

How to apply

If you decide that a Personal Pension plan may be right for you, find out more about how to apply. The first step is to talk it through with a financial adviser to make sure it's the right pension plan for you. If you don't have an adviser, you can find one in your area at unbiased.co.uk.

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