Aviva Annuity

There are lots of extra features that your can add to your Aviva Annuity such as escalation, a guaranteed payment period or an enhanced annuity. These features can be tailored to your personal circumstances. When assessing these, you need to think carefully about your immediate and long-term needs. You do not have to choose these extra features and you should speak with your Financial Broker before making a decision.

If you’re single, a ‘single life’ annuity, which provides a pension income only for you for the rest of your life, may be suitable.

If you have a spouse or civil partner who relies on you financially, you may want to consider a ‘joint life’ annuity, as this will continue to pay them a pension income for the rest of their life if you die before them. You have a choice as to how much your spouse or civil partner’s pension income will be from 100% of your pension income down to as low as 20%. If you choose this option, your pension income will be lower.

These are the most basic types of annuities. They pay a higher starting pension income than other types of annuity but your income will always stay the same, so the buying power of your pension income may reduce each year because of inflation. These are called ‘level annuities’.

Inflation is a fact of life and if your pension income remains flat, its buying power will reduce over time. For this reason, with the Aviva Annuity you can choose for your pension income to increase each year to lessen the effect of inflation.

The pension income you start on will be lower than a level annuity. This is because some of the money from your pension fund is held back initially to pay for increases to your pension income each year. Typically you have the choice of your pension income growing by up to 3% each year. These types of annuities are called ‘escalating annuities’.

You should be aware that it can take quite a number of years before the pension income under an escalating annuity reaches the amount payable under a level annuity. You should speak to a Financial Broker to ensure the decision is right for you.

Something to bear in mind is that if you use the money from your pension fund to buy an annuity and depending on when you die, you may not get back what you’ve paid into it.

If you choose a ‘joint life’ annuity, this will pay a pension income to your spouse or civil partner, after you die. But if you both die soon after buying it you could still lose out. One way to protect against this is to buy an annuity that guarantees to pay the income for a set period of time regardless of how long you live. Your family may also benefit from Aviva's Value Protection feature depending on when you die.

Single Life Annuity: If you die within 90 days of the earlier of your contract date or annuity start date, we will make a payment to your estate. This will be equivalent to the value of your purchase amount, minus any payments already made to you.

Joint Life Annuity: If you die within 90 days of the earlier of your contract date or annuity start date, and your spouse / civil partner (who is named on your policy) dies before you, a lump sum equivalent to the value of your purchase amount, minus any payments already made will be paid to your estate. No further payments will be made under your policy.

The contract date is the date the policy comes into force and the annuity start date is the date your annuity payments accrue from.

These are guarantees made by us that if you die within a set period of time, the money you would have received for the rest of that period will be paid as an income to your spouse / civil partner or personal legal representative. You can choose a guaranteed payment period of:

• 2 years
• 3 years
• 4 years
• 5 years
• 10 years

For instance, if you buy an annuity with a five-year guarantee but die at the end of year one, your spouse / civil partner or personal legal representative will still receive the pension income for the remaining four years. Of course, if you live beyond this five year period, you will still receive a regular pension income for life.

We offer a minimum one year guaranteed payment period as standard, but you will always have the option of selecting a different guaranteed payment period when applying for an Aviva Annuity.

Overlap is only relevant to ‘joint life’ annuities with a guaranteed payment period of 5 years. Upon your death, an annuity with overlap will commence paying the second pension income to your spouse or civil partner and in addition, will continue to pay the main pension income to your spouse or civil partner up to the expiry of the guaranteed payment period.

The features you choose affect the level of pension income you receive. Generally, the more options you add, the more it will cost you, so the lower your pension income will be. However, some options will hardly affect your pension income at all. It’s worth speaking to a Financial Broker about this and to find out how much you could get depending on the options you select.

You will be able to choose how often you receive your pension income. We can pay this to you monthly or yearly. The payment frequency you choose will also apply to any pension income that may be paid to your spouse / civil partner or personal legal representative following your death.

Payment will be made on the 1st day of the month following receipt of all documentation required to set up your annuity. This applies for both monthly and yearly paid annuities. If we do not receive all of the relevant documentation within 15 working days of the end of the month, it is likely that your annuity will not be paid until the 1st day of the following month – but your first payment will be in respect of that month and the previous month.

Payment of the annuity must be to a bank, building society or Credit Union. Money will be credited to the  nominated account by Electronic Funds Transfer (EFT).

Single life annuity – if you do not have a guaranteed payment period on your annuity your pension income will stop when you die.

Annuities with guaranteed payment periods - if you die during a guaranteed payment period your pension income will continue to be paid to your spouse / civil partner or personal legal representative at the same frequency it was paid to you. The next payment will normally occur on the 1st of the month after we receive all of the requirements to process the death claim. This payment will include any back payments that may be due since your death. However, no proportionate payments will be made in respect of the period from the date of your death to the 1st of the following month.

For yearly paid annuities the next payment will occur on the yearly payment date after we receive all of the requirements to process the death claim. However, no proportionate payments will be made in respect of the period from the date of death to the yearly payment date.

Joint life annuities - if a pension income is to be paid to your spouse / civil partner or personal legal respresentative following your death, the first payment will occur on the 1st of the month after we receive all of the requirements to process the death claim. This payment will include any back payments that may be due since your death. However, no proportionate payments will be made in respect of the period from the date of your death to the 1st of the following month.

For yearly paid annuities the next payment will occur on the yearly payment date after we receive all of the requirements to process the death claim. However, no proportionate payments will be made in respect of the period from the date of your death to the yearly payment date.

The income from it will be taxed as earned income, according to the tax rules at the time you retire. The tax you pay will be based on your personal circumstances.

You will have to pay tax at your marginal rate of tax, subject to your tax status. The current income tax rates are 20% or 40% depending on your earnings. A deduction for the Universal Social Charge (USC) of up to 8% may also be made depending on the level of your income and your age.

Based on information provided to us by the Revenue Commissioners, we will deduct tax and other payments and send these directly to the Revenue Commissioners on your behalf. Any shortfall of tax or USC may be deducted from subsequent annuity payments that we pay to you.

No. Under current Revenue rules it is not possible to stop an annuity and trade in any balance for cash. Neither is it possible to change any of the features of the annuity (for example the rate of escalation or switching the annuity from a single life to a joint life) once the annuity has been bought.

Annuities are designed to provide you with certainty of income during retirement. Once the initial set of options are chosen they cannot be changed. So, it’s important to choose your annuity carefully and get it right the first time. Talk to a Financial Broker before you buy your annuity.

Your rate depends on age, benefit options (e.g., spouse’s pension, guarantee period, escalation), amount of your pension fund and prevailing market conditions. Enhanced annuity rates may be available after a simple health and lifestyle assessment.