Updated: April 16, 2024
Transferring a Pension Into a Drawdown Account
Thinking of transferring your pension to take advantage of a drawdown facility? Our in-depth guide explains all you need to know.
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If you think transferring the savings in your pension pot into a drawdown account is the right move for you, it’s time to consider the practicalities.
In this comprehensive guide, we explain everything you need to know, including whether you need to stay with your current pension provider, how much you can transfer at a time, and why it’s always worth seeking advice from an independent pension advisor before taking any action.
Read on for more information or jump to the section that’s relevant to you via the links below…
The following topics are covered below...
Can you transfer your pension into a drawdown account?
Do you need to stay with your existing pension provider?
Do you have to move all your funds at the same time?
How to transfer your pension to take advantage of drawdown
Can you switch from one drawdown provider to another?
Can you transfer your pension into a drawdown account?
Yes, it’s possible. If you’ve reached the minimum retirement age (currently 55 years old but this is increasing to age 57 in April 2028) with a defined contribution pension, and you want the flexibility of accessing your money as and when you need it, you can transfer your pension to a drawdown account.
However, there are a number of factors that could prevent you from moving into drawdown, or at the very least, make it tricky.
These include:
Your age
You typically can’t start accessing the money in a personal pension until you reach minimum pension age. The only real exception is if you’re in poor health.
Whether you’ve bought an annuity
Most annuity providers will give you a 30 day cooling off period in which you can change your mind. After this time, the decision to buy an annuity is typically irreversible.
If you’ve used all your pension money to buy an annuity, you won’t have any funds to transfer into drawdown.
If you have a defined benefit pension
You can’t move money from a defined benefit (DB) or final salary pension scheme into a drawdown account. However, if you have one of these pensions and want to take a flexible income, you can transfer your funds into a defined contribution scheme.
It should be noted that in most cases, savers would be better off sticking with their DB or final salary pension, even despite the cash incentives some employers offer staff or former staff to transfer.
You should always consult an advisor before making any decisions. If your pot is valued at £30,000 or more, you’re legally obliged to seek advice if you’re considering a transfer.
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Do you need to stay with your existing pension provider?
No, you don’t have to open a drawdown account with your current pension provider. In fact, not all providers offer flexi-access drawdown plans.
Whether your provider does or not, it’s always best to shop around to find a provider that best suits your circumstances.
This isn’t always easy to do as providers present their charges and fees in different ways. An independent pension advisor can help you.
Need help comparing drawdown providers? Get in touch and we’ll match you with one of our independent pensions advisors today.
Do you have to move all your funds at the same time?
No, you can move all or part of your pension fund into drawdown. If you move your funds gradually, this is called partial or phased drawdown.
How to transfer your pension to take advantage of drawdown
These are the steps you should take if you’re ready to move your pension into drawdown:
ask your current provider for a pension statement
An up-to-date pension statement will tell you how much you have in your pot, how your investments are performing and provide an estimate of your future pot if you remain invested. This will help you and your advisor establish whether drawdown is the right option for you, and if so, which type of plan would best suit your circumstances.
decide how much income you’ll need
You should work out early on how much income you’ll need from your pot and how regularly you’ll need to make withdrawals as this will determine the type of drawdown plan you opt for. For example, if you’re still working but reducing your hours, phased drawdown may suit you best.
speak to a pension advisor
There’s a lot to consider when it comes to pension drawdown and you want to ensure you’re making the right decisions. After all, what you do with your pension pot will determine how much income you’ll have to live on in retirement.
An independent pension advisor is best placed to help you. They’ll be able to review your circumstances and find the best plan for your needs from the whole market. They’ll also save you time, and, very likely, money, by reading the small print and comparing providers on your behalf.
An advisor can also carry out an initial review of your pension to determine its current performance and monitor your investments going forwards.
We have experienced pension advisors in our network who specialise in drawdown. Make an enquiry and get matched with an expert.
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Can you switch from one drawdown provider to another?
Yes. If you’re not happy with your drawdown provider, you can transfer to another one. Factors that may prompt you to switch include: lower service fees, a wider range of investment options and better service.
Bear in mind, however, that your existing provider may charge you exit fees if you decide to leave, which could be substantial, so you should weigh up the pros and cons carefully.
Speak to a pension drawdown specialist
Transferring your pension to a drawdown plan is a big decision and requires a lot of thought and consideration. From how much to transfer, to which provider to go for, you’ll have plenty of questions that’ll need answering. A regulated pension advisor can help you determine the best course of action and make sure you have enough money so that you can enjoy your retirement.
We have advisors in our network with years’ of experience helping people with pension drawdown.
Give us a call on 0808 189 0463 or make an enquiry for a free initial chat.
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FAQs
Yes, although remember that after the initial cooling off period, this decision would be irreversible. Another option, provided your pot was big enough, would be to use some of your pot to buy an annuity, and leave the rest for drawdown. Short-term annuities are also available, which pay out a guaranteed amount income for a limited period of time.
You’re not legally obliged to seek advice unless you’re considering transferring your defined benefit pension to a defined contribution scheme to access income, and your pot is worth £30,000 or more. However, seeking advice is highly recommended as an advisor can help you find the best plan to suit your circumstances, help set it up, and monitor your investments.
Ask a quick question
We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions Ask us a question and we'll get the best expert to help.
Tony Stevens
Finance Expert
About the author
Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events.
Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been “Hope for the best, but plan for the worst”, and believes that the biggest impact that an adviser can have on a client’s life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they want their retirement to be.
