Flexible income

Money when you want with income drawdown

What is income drawdown?

Take money from your pension as and when you want it. It’s a flexible way to take an income from the minimum retirement age – currently 55 – and keeps you in control. 

Flexible options

Take money as and when you need it

Up to 25% tax free

You can take up to 25% of your pension as tax-free cash but any funds in drawdown will be taxable

Change your mind

Take a different retirement option or combine this with another option at any time

The value of your pension can go down as well as up and you may get back less than has been paid in. All references to taxation are based on our understanding of tax rules and HM Revenue & Customers (HMRC) practice.  Tax rules are subject to change and depend on your individual circumstances.

How it works

Discover how income drawdown works to help you understand if it’s right for you – or see how it could work for you with our Retirement Planner.

Step 1

Using your tax-free allowance

You’re entitled to take up to 25% of your pension pot as a tax-free lump sum. You have the flexibility to take this in one withdrawal, or spread it across multiple withdrawals. With each tax-free withdrawal, three times the amount taken tax-free is moved into a drawdown pot and withdrawals from there will be taxable.

Step 2

Accessing more of your pension pot

You can continue to make single withdrawals as and when you like, providing you have the funds available. Or you can set up a regular withdrawal, with the flexibility to change how much and how often you take money.

Your withdrawals will be treated as income, and taxed according to your individual circumstances.

Step 3

Regularly review your remaining pension

The rest of your pension will stay invested. The value of your pension can go down as well as up and you may get back less than has been paid in.

You can review your investment options at any time to make sure you’re happy with the level of risk involved.

What our income drawdown offers

  • No surprise fees or charges
    There are no charges for withdrawing money from an Aviva pension, but you’ll continue to pay the same administration and fund management charges for your pension
  • Manage your pension online
    Easily view and manage your pension online by logging into your MyAviva account
  • Invest through Investment Pathways
    The money you don’t withdraw will stay invested. You should consider your attitude to risk and retirement objectives when considering where to invest. If you’re not sure, or you want some help choosing funds, Investment pathways may be presented to you as an option to help, with four simple investment outcome options. The value of your pension can go down as well as up and you may get back less than has been paid in
  • 25% is tax free
    You can take up to 25% of your pension tax-free, either all at once, or spread across multiple withdrawals. But any money withdrawn from funds moved to drawdown will be subject to income tax according to your personal circumstances
  • Flexible options
    You should regularly review how much you're taking and can call us to let us know if you want to change the amount or how often you take it
  • Change your mind
    If you decide income drawdown isn’t right for you, you can change your mind at any time and take a different retirement option, such as a guaranteed income for life. This doesn't include the option to cancel any existing tax-free lump sum payments.

Before taking income drawdown

There are some things you need to be aware of before choosing to take your pension in several lump sums or as regular withdrawals.

  • You should consider all your retirement options before going ahead with income drawdown and shop around to make sure you get the best deal as other providers might offer products which are more suitable to your personal circumstances
  • Your future income isn't guaranteed and it may need to last a lifetime. The more money you take, the faster your pension will be depleted and the more likely it is to run out
  • If you’re still working, your salary plus pension withdrawal may push you into a higher tax band than if you just took the 25% tax-free lump-sum from your pension on its own
  • Money you get, or may be able to take, from your pension is looked at when working out your entitlement to any state benefits. Taking any withdrawals, or going into drawdown without taking withdrawals, may affect the benefits you would receive
  • If you take money from your pension you can still pay into your pension in the future. You can take up to 25% tax free but once you've withdrawn any taxable cash, you will be subject to tax charges if you contribute more than £4,000 in total to any defined contribution pensions in a tax year. This is known as money purchase annual allowance (MPAA). Read more about tax implications
  • If the total money you take out across all your pensions exceeds the lifetime allowance, you'll pay a lifetime allowance charge on the excess. The lifetime allowance for the 2021/22 tax year is £1,073,100
  • If you're planning to put the money you take out into savings or other types of investment, you may want to consider the structure and potential tax implications

Is it right for you?

Before you start using your pension, you need to consider if taking your money flexibly is the right option for you both now and in the future.

Use your money your way

When Paul’s daughter got engaged, he wanted to contribute towards the wedding. He took a tax-free lump-sum from his pension to help pay for some of the costs. He kept the rest in his pension fund, so he had the option to take drawdown or buy an annuity later to support him through his retirement.^

Keep your money invested

Amy was looking at pension options but wasn’t sure she was ready to retire. Drawdown suited her because she could take money whenever she needed to, continue paying in and keep her money invested. Plus, she could manage her funds easily through our online investment service without needing to be an expert .^

^Examples created for promotional purposes.

Speak to our pension experts

We offer free pension support and you can get tailored financial advice too. So if you’re struggling to get your head around your pension or have questions about your options, we can help.

Pension Wise

This government service offers free and impartial guidance on retirement options for people over 50, either over the phone or face to face.

Visit Pension Wise

pension wise