Aviva Split Deferred Calculator: How It Works

The Aviva split deferred calculator works out how a deferred annuity’s income changes when you split it into two or more segments with different start dates, showing the total projected income at each stage. You enter the pot value, the deferral periods, and the growth or annuity rates for each segment, and it returns the income you can expect at each activation point. This page explains the calculation behind that split, so you can check a provider’s illustration or model your own scenario.

Formula

The calculator uses a compound growth formula for each segment, then applies an annuity rate to convert the grown fund into annual income. For a segment with initial amount A, deferral years n, annual growth rate g, and annuity rate r:

Income = A × (1 + g)^n × r

Where:

• A = the portion of the pot allocated to that segment (in £)
• n = the number of years that segment is deferred (years)
• g = the annual growth rate of the fund (decimal, e.g. 0.03 for 3%)
• r = the annuity rate at activation (decimal, e.g. 0.045 for 4.5%)

The total income is the sum of all segments. In the calculator above, the first segment is a percentage of the pot, and the second segment is the remainder.

Worked Example

Using the default values from the calculator: pot = £100,000, first segment = 50%, first deferral = 5 years, second deferral = 10 years, growth = 3%, annuity rate = 4.5%.

1. Segment 1 amount = £100,000 × 50% = £50,000
2. Segment 1 grown = £50,000 × (1.03)^5 = £50,000 × 1.159274 = £57,963.70
3. Segment 1 income = £57,963.70 × 4.5% = £2,608.37 per year
4. Segment 2 amount = £100,000 × 50% = £50,000
5. Segment 2 grown = £50,000 × (1.03)^10 = £50,000 × 1.343916 = £67,195.80
6. Segment 2 income = £67,195.80 × 4.5% = £3,023.81 per year
7. Total income when both segments are active = £2,608.37 + £3,023.81 = £5,632.18 per year

The calculator shows £2,608 for segment 1, £3,024 for segment 2, and £5,632 for the combined total, matching the example.

What a Split Deferred Annuity Is

A split deferred annuity (also called a phased or segmented annuity) lets you divide your pension pot into several parts, each with its own start date. You buy the annuity with a lump sum, but each segment begins paying income at a different future date. For example, you might have one segment start at age 60, another at 65, and a third at 70. This is different from a single immediate annuity, which starts paying right away, or a single deferred annuity, which starts on one future date.

The main reason people use this structure is to match income to expected future needs. You might want higher income in early retirement when you are more active, or you might want to delay some income to a later age when State Pension or other income sources kick in. It also allows you to keep part of your pot invested for longer, potentially benefiting from growth, while securing a guaranteed income for the near term.

How the Split Deferral Calculation Works

Each segment is treated as a separate mini-annuity. The provider takes the portion of your pot allocated to that segment, applies the agreed growth rate (often a fixed rate or a with-profits bonus) for the deferral period, and then converts the resulting fund into income using an annuity rate. The annuity rate depends on your age, gender (where allowed), health, and prevailing interest rates at the time the segment starts.

In practice, providers quote a

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