Using my pension money

Using your pension money now could help your finances, but also affect your future.

Freedom to choose

From the age of 55, you have the freedom to use your pension money. You can take the first 25% tax-free and the rest will count as part of your annual income, taxed at your marginal rate. So, what are your options?

Withdraw all your pension money

Take money whenever you need to

Buy an income for life

Leave your money where it is

You can also mix and match to suit you

Take control of your pensions

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Things to think about

Using your pension money will leave less money in your pension, and will have an impact on:

  • The money you’ll have in retirement. Anything you use now will mean less, or even nothing at all, is left in your pension.
  • The value of your investments. If you choose to only withdraw some of your money, what’s left will remain invested, and could go down as well as up in value.
  • The access you have to your money. Once you buy an income for life you can’t generally change it or cash it in, even if your personal circumstances change.
  • The inheritance you can pass on. This depends on what you decide to do with your pension money. Find out more

Stay on track

Whether your retirement’s a long way off or just around the corner, having a clear idea of how to achieve your aims is important. Aviva's simple online tools and calculators are here to help.

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The Aviva Pension

A flexible way to save for your retirement. It’s an individual, self-invested pension, so you control where your money goes.

Income Drawdown

Use as much or as little of your pension money as you want, whenever you want from age 55.

Annuity

Receive a guaranteed income for life when you retire.

Learn more about retirement

Important information about this video

The information contained within the videos on the Investment and Retirement site was, to the best of our knowledge and belief, correct at the time of filming and unless otherwise stated, relates to the 2016/2017 tax year. Tax rules may change in the future. These videos should not be used as a substitute for financial advice and the content may not apply to your personal circumstances. If you are not sure whether this product is right for you, you should seek financial advice. If you do not currently have a financial adviser you can find one at www.unbiased.co.uk

Your options at 55

Video transcript

VO: If you’re 55 or older and have a defined contribution pension, you have four main choices over how to access the money you’ve saved:

One - withdraw all your pension money

Two - take money whenever you need to

Three - use it to buy yourself an income for life

Or four simply leave the money where it is. You can make your choices later.

You’ve got to think about the taxman too. You can usually take 25% of your pension fund tax free. The rest will count as part of your annual income, which you’ll be taxed on at your highest rate.

As tempting as it might be to withdraw all of your pension money now, you need to think carefully about how much you’ll need to live on as it may need to last you the rest of your retirement. Once you’ve made a decision, you may have to stick with it.

But that doesn’t have to mean you take nothing from your fund. You might want to take some cash to do some home improvements, or take a holiday.

Or you might find you could save money by taking a cash lump sum to put towards paying off any debts. Remember, any money left in your pension will remain invested and the value could go down as well as up, so you may get back less than has been paid in.

Whatever you decide to do, it’s worth giving some thought to your plans for your pension fund right now.

Otherwise, when the time comes to finally put your retirement plans into action, the wheels might come off.

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Trace your lost pensions

Video transcript

These days, people change jobs frequently.

As a result, they may have pensions that they’ve forgotten about or have lost the paperwork for.

Don’t worry if this sounds like you, because you can get free help from the Government’s ‘Find Pension Contact Details’ webpage.

Just go to www.aviva.co.uk/pension-tracing

(Web address moves to bottom of the screen and stay son screen through the duration of the video)

And contact the Pension Tracing Service. Their details can be found on our pension tracing page.

You’ll just need to know the type of pension you’re looking for, whether it be a;

  • A workplace pension
  • A personal pension
  • Or a civil service, NHS, teacher or armed forces pension.

You’ll also need to know the employer’s name.

The Pension Tracing Service will then give you the details you’ll need to contact your pension scheme provider.

To help your pension provider when you contact them, please have to hand your full name, home address and any other contact information, like phone number or email.

It’s that simple!

Watch our short video to find out how equity release could help you.

Video transcript

Having a clear out?

I bet there’s a lot of your past hidden away inside that house. But here’s something to think about. Your future might be locked up in there, too.

You’re both over 55, right?

And you own a home worth at least £75,000?

That’s good, because equity release providers do take your age and the value of your home into account when they’re deciding who’s eligible. They’re often around this level but can vary between providers.

All right then. Let’s see what we could find locked up in the value of your home. Equity release is a way of unlocking some of the value of your property. It’s not suitable for everybody, but if you are eligible it’s a way to access money from your home without having to move.

With a lifetime mortgage, the most common form of equity release, you don’t usually have to make any repayments until you die or go into long term care, but interest will be charged on the full amount.

So let’s look at what might be inside that house…

Your grandchildren’s education

Special treats such as a nice holiday or a new car

Home improvements

Helping your kids get on the property ladder

Or just a more secure retirement.

Not everyone looks on their home as a part of their financial planning, but if its value has gone up, you may have been saving for your future without realising it.

So you might find you can hang on to all those good memories tied up in your home and think about a way to make some more for the future.

Taking out equity release may affect your tax position and any entitlement to welfare benefits.

You should bear in mind that equity release will reduce the inheritance you could leave – possibly to nothing.

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