What are death benefits?

These are the benefits we pay out if you die before taking any benefits from your pension plan.

How are death benefits paid?

When you die, we can pay out death benefits in one of three ways:

  • A lump sum
  • A dependent’s or nominee’s flexi-access drawdown
  • A dependent’s or nominee’s pension income (also known as an annuity)

Any death benefits we pay will count towards your lifetime allowance. If the death benefits exceed your lifetime allowance, your beneficiary will have to pay a lifetime allowance excess charge in the normal way. We’ve included separate sections within this page to give further explanations on what flexi-access drawdown and lifetime allowance is. See below for more information.

Will the money be paid to my estate?

We’ll pay your death benefits as a lump sum to your estate if you have no widow/er or surviving civil partner, children or a nominee at the time of your death.

If you die before taking benefits from your pension plan, dependant on the type of policy you hold we’ll calculate your death benefits using the value of the plan at one of these points; the date of your death, the date we’re told of your death or the date of our requirements being received. The circumstances at that time would determine how we pay the benefits.

If you die after taking benefits, the death benefits will depend on the options you chose when you set up your payments from your pension pot.

Expression of wishes

You may want to nominate a beneficiary or beneficiaries for any death benefits. This is known as an expression of wishes.

You’ll need to tell us which individuals you would like to benefit from any death benefits that may become payable if you die before taking benefits from your pension plan.

This is not a form of trust and is not binding on Aviva. However, it gives us an indication of your wishes, at the time you make your nomination.

We need to take any nominations directly from you as the planholder. We can’t accept nominations from any third parties or financial advisers. We can’t accept any nominations after your date of death. For most pensions, we can take your nomination over the phone.

Your nominated beneficiary

A nominated beneficiary is someone you’d like us to consider paying any benefits from your pension pot to if you die before taking your pension benefits.

A nomination of beneficiaries is not legally binding we do pay a very high regard to your wishes in using our discretion to decide where to pay benefits.

How do we decide who to pay death benefits to?

During our claims settlement process, we check all information known to us regarding your estate and the information you’ve given us, including your wishes.

Unless the pension plan is subject to a valid trust, we have discretion over who we pay out death benefits to. This will depend on whether your plan is either an Aviva Personal Pension Scheme or a Stakeholder scheme. We’ll consider paying to one or more of the following, in no particular order:

  • Your Widow, widower or surviving civil partner
  • Your Children (if the child is under 18, their legal guardian will have to sign the death claim form)
  • Your Nominee
  • Your Estate

The list of potential beneficiaries will depend on the product you hold and you should check the policy terms and conditions for further details. This will also indicate what type of scheme your plan is with.

We don’t have a priority order in which we consider any potential nominated beneficiaries.

If your pension plan is written under a valid trust, we’ll pay the death benefits to the trustees.

Can I nominate my children?

Yes. If the child/children are under 18 at the time of your death, their legal guardian will have to complete the death claim forms.

If this concerns you, you should take legal advice.

Keeping your details up to date

We recommend you regularly check and update your beneficiary details as your personal circumstances can change.

You can check who your beneficiaries are on your MyAviva account. To make any changes to them please call us on 0845 9000 817.

An alternative to a nomination is a trust

What is a trust?

A trust transfers legal ownership of a policy to trustees, who act on behalf of the beneficiaries if you die before taking your benefits.

We must pay death benefits to the trustees to pass onto the beneficiaries.

How do I put my policy into a trust?

We recommend you speak to your financial or legal adviser first before placing your policy into a trust. If you decide you would like to go ahead with using a trust, your financial adviser can download the relevant form for you. Alternatively, you can call us on 0845 9000 817 and we’ll send the relevant Aviva trust form out to you.

You and your chosen trustees will need to sign the trust form, with all signatures witnessed. Once you’ve sent the form back to us, we’ll update our systems to show this.

Please note: If we’ve previously sent you trust forms, we need you to confirm you haven’t completed or signed them before we can issue new forms or process a claim. Confirmation can be taken in writing or verbally from you or your financial adviser.

Can I amend my trust once it has been set up?

Because trusts are legally binding it is not always simple to amend them.

You can amend the Aviva Personal Pension Trust by completing a Deed of Appointment to change either the trustees or beneficiaries. We will need all trustees to sign this document. If a trustee dies, we’ll need to see the death certificate.

For other non-Aviva trusts, you will need to check with your own legal advisers.

Who do you pay the death benefits to if the policy is subject to trust?

We’ll pay any death benefits to the trustees. If a sole trustee has died, we would pay the benefits to their personal representatives, but only if their estate has been awarded a Grant of Legal Representation.

Are the signatures of all the trustees necessary?

Yes. In England & Wales, any decisions made under the trust provisions must be agreed by all the trustees. We would expect to see documents signed by all trustees.

Do you offer Spousal Bypass Trusts?

We don’t offer this kind of trust. You may like to discuss this with your legal adviser.

Lifetime allowance

What is a lifetime allowance?

The lifetime allowance is a limit on the value of retirement and death benefits you can draw from registered pension schemes before paying a lifetime allowance excess charge. The limit covers all your pensions.

What are the current and historical lifetime allowance amounts?

The lifetime allowance is currently £1.25 million. The following table shows the lifetime allowance since 2006/2007.

Tax year Lifetime allowance
2006/2007 £1.5m
2007/2008 £1.6m
2008/2009 £1.65m
2009/2010 £1.75m
2010/2011 £1.80m
2011/2012 £1.80m
2012/2013 £1.50m
2013/2014 £1.50m
2014/2015 £1.25m
2015/2016 £1.25m
2016/2017 £1m
2017/2018 £1m
2018/2019 Expected to increase in line with the customer Prices Index

What happens if I exceed the lifetime allowance limit?

You or your beneficiary will have to pay a lifetime allowance excess charge if you exceed the lifetime allowance limit. At the time of payment, HMRC will apply a lifetime allowance excess charge to the value of benefits in excess of the lifetime allowance. The amount will depend on how the excess is paid.

Flexi-access drawdown

What is flexi-access drawdown?

Flexi-access drawdown is a new form of accessing a pension fund. You can choose the amount that you can drawdown with no maximum or minimum limit.

Do you offer flexi-access drawdown?

This is available on our Aviva Platform.

How does it work?

There will be no restrictions on the amount of withdrawals you can take from flexi-access drawdowns. This means you can take the whole fund as one payment or at whatever level you choose.

You’ll pay tax on all withdrawals from your flexi-access drawdowns at your marginal rate of income tax.

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