Retirement

Our retirement timeline provides more information about what options are available to you and the things you may want to consider, taking into account the number of years you have until you retire.

Pension

A long term investment aiming to build up a fund of money which you can use to provide for your retirement

  • You can pay up to £3,600 a year into a pension, or up to 100% of your pensionable earnings - whichever is greater.
  • You’ll get tax relief on money you pay in up to £40,000 for the 2016/2017 tax year.
  • You can start taking money out of your pension from the age of 55.
  • You can usually take up to 25% of your pension fund as tax-free cash.

The value of investments can go down as well as up and you may get back less than has been paid in.

Your questions answered

What’s a pension?

  • Whilst some employers still offer defined benefit - sometimes called final salary - pension schemes, which promise to pay out an income based on how much you earn when you retire, the most common form of pension scheme nowadays is defined contribution. A defined contribution pension is a way of holding long-term investments until you're ready to retire and take cash or an income from the fund you've built up. Most employers offer defined contribution schemes and you can also take one out privately.
  • Find out more on our Pensions explained page

Am I eligible to get one?

You need to be:

  • A UK resident
  • Aged under 75

How do pensions work?

  • You’ll have a wide choice of investments
  • Charges are low
  • You can usually manage your pension and make changes online

You'll automatically be given basic rate tax relief. If you pay tax above the basic rate, you will need to claim any additional tax relief through your tax return.

How do I pay in?

  • You can make regular or one-off contributions
  • You can make contributions directly or from your salary
  • Your employer can make contributions too

How much might I think of paying in?

To help you decide what you can afford, use My budget planner

  • It may also depend on your needs when you’re retired – My retirement planner can help you to work this out
  • Starting a pension sooner rather than later could make a big difference

What happens when I’m ready to retire?

  • You can take cash from your pension fund from the age of 55 - find out about How do I take money from my pension fund?
  • You can normally take up to 25% of your pension fund as tax-free cash, with tax payable at your marginal rate on the rest.
  • You can choose to use some or all of your pension fund to buy an income in retirement – you can find out more about this in the How do I take income from my pension fund? section of our website

Can I leave money from my pension to my dependants?

You could consider:

  • Money remaining in your pension fund doesn't normally count as part of your estate for inheritance tax.
  • If you die, your pension fund can be paid to your chosen beneficiaries potentially subject to tax. For more information go to what happens to my money when I die?
  • If you've bought an annuity to provide an income for life, this will normally stop when you die – although you can choose options which could pay an income to a dependant after your death, or guarantee that the annuity will pay for a minimum number of years even if you die within that period. Aviva's pension annuity comes with payments guaranteed for one year as standard.

What other options might help to fund my retirement?

You could consider:

  • A cash ISA or a savings account.If you’re uncomfortable with the thought of risk to your capital
  • A stocks and shares ISA or an investment account If you’re willing to accept risk alongside higher growth potential than a cash ISA or savings account.

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