Both phased and single drawdown are available through Pension Portfolio on the Aviva Platform. Pension Portfolio offers flexi-access drawdown on a single or phased basis and gives your clients complete flexibility with their pension fund in retirement.
Single and phased flexi-access drawdown options available through Pension Portfolio on the Aviva Platform
Income drawdown options that allow you to maximise your clients' tax position
Full flexibility for your clients on how they access their retirement funds, to suit their individual needs
Why Income Drawdown?
Income Drawdown through our Pension Portfolio gives you options that work for your clients - whether they require light-touch tax planning or a more hands-on approach.
- Phased flexi-access drawdown
- Single flexi-access drawdown
- Capped drawdown (for clients already in capped drawdown prior to 6 April 2015 only). Unfortunately, clients are not able to designate uncrystallised funds for capped drawdown into arrangements created to receive a transfer. Self-Select phased drawdown is not available for capped drawdown clients.
The Money Purchase Annual Allowance will apply as soon as clients take taxable income through flexi-access drawdown.
|How it works|
|Self-Select phased drawdown|| |
• Offers regular income as a mix of tax-free cash and taxable income.
• Tailor Self-Select to optimise your clients’ tax bands/allowances.
• Your client must take 25% tax-free cash, but they can take less than 75% of the associated taxable income. So you can use taxable income to ‘fill’ a tax band and top up to the income level needed with tax-free cash. You can ‘flex’ this approach when needed, for example if your client’s other incomes change.
• You could choose to minimise crystallisations, to protect Pension Commencement Lump Sum (PCLS) growth. We automatically calculate the minimum crystallisation needed to pay your client’s chosen income amount.
• You can choose whether or not your client’s tax-free cash is included as part of their chosen income.
• This flexibility allows you to demonstrate expertise in reducing the tax your clients pay.
|How it works|
• Can be a suitable option where client needs a tax-free lump sum at the outset.
• Clients can crystallise the whole fund and take 25% as tax free cash. Otherwise, if they don't need all of the tax-free cash immediately then they can crystallise just part of the fund. 25% of the crystallised amount is paid as tax-free cash, and the remaining 75% is moved to the post-retirement account.
• Taxable regular income payments or lump sums can be paid from the post-retirement account. Any withdrawals will be taxed at the client’s marginal rate of tax.
The value of investments can go down as well as up and investors may not get back what they put in. Tax rules may change in the future.
Facts and figures
|Drawdown restrictions||Flexi-access drawdown|
Minimum client age
|Minimum investment amount||-|
|Minimum amount clients must move to a post-retirement account for single drawdown||-|
|Ad hoc withdrawals||Yes, via the ad hoc withdrawal route on a gross basis|
|Payment frequency||Monthly, quarterly, half-yearly or yearly|
Existing capped drawdown clients
Capped drawdown is no longer available for new clients. But if they were in capped drawdown before 6 April 2015 then they can transfer into a new capped drawdown arrangement on the Aviva Pension Portfolio and still stay in it and designate additional funds as required as long as they don't exceed GAD limits. If clients go over these limits, they'll automatically move into flexi-access drawdown which will trigger the money purchase annual allowance. We can accept capped drawdown transfers, but we can't facilitate the addition of further funds into the arrangements created to receive these transfers.
What’s a pre-retirement account?
A pre-retirement account holds clients' uncrystallised funds.
What’s a post-retirement account?
A post-retirement account holds clients' crystallised funds.
We use this money to pay clients' income, so we have to crystallise enough funds into this account to meet clients' income needs.
Income drawdown isn't suitable for everyone. There are risks and benefits which your client will need to consider. Clients will depend on you to adjust their income/tax position.
- It’s completely flexible. Clients can carry on working and use variable income drawdown to top up their income if, say, their hours drop or there's a need for more funds
- Flexi-access drawdown clients can take any amount out of their pension fund, whenever they wish - even all of it
- Clients can choose not to take an income at all
- The Target Income option lets clients use a combination of tax-free and taxable cash, making their income tax-efficient
- Clients can choose from a selection of investment options
- Clients aren't locked in for life, so they can switch to another retirement income option (such as an annuity)
- Clients can choose to leave their remaining pension fund (crystallised or uncrystallised) to any named beneficiary. If the client dies on or after their 75th birthday the beneficiary may have to pay tax on it
- We can normally pay death benefits for clients who die before age 75 without any tax charges
- Existing capped income drawdown clients have some control over the amount of income they take (subject to GAD limits).
Things to consider
- The value of clients’ pension funds can go down as well as up, and may fall to less than the amount they paid in
- Investments must grow, if they're going to compensate for the income withdrawn. If that doesn't happen, the pension fund will be depleted – especially if the client takes a high level of income. There's a risk a client could run out of money
- Taking income through flexi-access drawdown will trigger the money purchase annual allowance
- There’s no guarantee that annuity rates will improve in the future. They may fall, which means there's a risk of lower income if your client is using the product to delay buying an annuity
- If your client is still in capped drawdown, they will continue to need GAD reviews every three years up to age 75 and every year afterwards
- A small number of clients may need to complete a tax return to reclaim overpaid tax
- The remaining pension fund will continue to be charged.
Pension death benefits
Passing on drawdown pension funds
Your clients will be able to nominate who they would like to receive their drawdown pension funds on their death. We will take those nominations into account when deciding who should receive death benefits. The chosen beneficiaries will then normally be able to choose whether they would like an income or a lump sum. If they leave any money within the pension on their death, that can be passed on to their beneficiaries and so on
For a client who dies aged 75 or over, the beneficiary will pay tax on any benefits taken from the funds at their marginal rate.
For a client who dies before age 75, benefits can normally be passed onto their beneficiary tax free.
You can also use Pension Portfolio to administer any funds your client may inherit themselves.
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