Although you can usually access your pension from the age of 55 (57 from 6 April 2028 unless you have a protected pension age), you may not be ready to retire. So what happens if you leave your money where it is?
Your money could grow
Money left in your pension stays invested and has the potential to grow.
Continue making payments
You can keep adding to your pension pot to build for your retirement.
Choose when you’re ready
You can make a decision about how you access your money when the time is right.
As your pension will remain invested, it can go down as well as up in value and you may get back less than has been paid in.
What do you need to consider?
There are some things you’ll need to think about when making your decision:
- The ins and outs of your pension
Make sure you read through the terms and conditions of your pension. Some pensions can have rules which mean you could lose out if you don’t use your money at certain times.
For example, you may need to use your money to buy an income or annuity before you reach age 75, or you may need to take your money at the age you originally planned to avoid losing valuable guarantees. So, make sure you know how your pension works and note down any questions you want to ask your provider when you contact them.
If you’ve got a pension with us, you can find out how to contact us or manage your pension quickly and easily by logging in to MyAviva. - Your money will still be invested
As with all investments, there’s a risk that the value of your pension could go down, as well as up. If that’s a concern you can choose to change how your money is invested to lower the amount of risk involved.
Plus, you’ll still need to pay any fees or charges associated with your pension, so make sure you’re taking those into account. - Tax allowances and state benefits
There may be tax implications to consider if you delay your retirement. Any regulatory changes to income tax, inheritance tax or government allowances could affect your pension. - Annuity rates can change
If you eventually decide to buy a guaranteed income for life (an annuity) with your pension pot, you may not get as good a deal as you would buying one now. This is because the rates they’re based on can go down as well as up.
Although, as an annuity is based on your potential life expectancy, you could receive a higher income if you are older when you purchase one, due to your life expectancy being shorter. - Life insurance as part of your pension
If you have life insurance under your pension policy, your life insurance will come to an end at your original retirement date, not necessarily when you take your pension money. - If you die before taking any of your pension money
If you die before age 75 your pension pot can usually be passed on to your beneficiaries free of income tax. On or after 75, your pension pot still gets passed on to your beneficiaries, but they may have to pay Income Tax on it.
If you die before 6 April 2027, death benefits will normally be free of Inheritance Tax. From that date, HMRC are changing the rules so that, if you die, death benefits payable from your pension to somebody other than your surviving spouse or civil partner will be included when calculating the value of your estate for the purposes of Inheritance Tax.
This information is based on our understanding of current UK tax legislation and may be subject to change in future. Keep in mind that tax treatment depends on your individual circumstances. - The retirement date on your pension
You'll need to let your pension provider know if you plan to defer your pension's nominated retirement date.
