0808 189 0463

      Menu

        0808 189 0463

        Updated: April 16, 2024

        Transferring a Pension into an ISA

        Thinking of transferring your pension funds into an ISA? Read through our comprehensive guide to find out if this is the best option for you to take.

        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.

        FCA Logo
        1 of 2
        2 of 2 Send!

        No impact on your credit score

        Since the introduction of pension flexibility in 2015, more people are seizing the opportunity to transfer their pension funds into an ISA account to potentially get the most from their retirement savings.

        We receive plenty of enquiries from customers looking to transfer their pension pot into an ISA. We’re often asked if it’s possible to transfer a pension into an individual savings account, whether it’s a good idea, and how to go about doing it.

        If you’re considering moving your pension pot to an ISA or lifetime ISA (LISA) and any of these questions ring true for you, you’ve come to the right place. Read on, where we’ll be covering:

        Can I transfer my pension to an ISA?

        Although transferring funds directly from a pension to an ISA is not typically permitted, provided it is defined contribution (DC) pension scheme, you are likely able to withdraw your funds from the age of 55 and move them to another product, such as an ISA.

        You can do this with a defined benefit pension (DB), though you may find the process more complicated without guidance from an expert.

        You are then free to invest this in an ISA if you wish, but it’s important to bear in mind the tax implications and other risks associated with draining your pension pot in favour of another scheme.

        You can take out up to 25% tax-free from a defined contribution pension, but if you decide to withdraw the whole pot, the remaining 75% will be subject to income tax.

        Speak to an expert today

        Should I transfer my pension pot into an ISA?

        The amount you can save into an ISA – where capital growth and withdrawals are tax-free – has increased so that you can (at the time of writing) deposit up to £20,000 each tax year, making it a tempting option to transfer your pension into.

        However, there are very few circumstances in which withdrawing your entire pension pot to invest in ISA(s) is appropriate, but a combination of the two could be a financially viable option.

        Read on to find out more…

        When organising your retirement income, your main goal should be to withdraw what you need while creating the smallest income tax bill possible. Everyone has a personal allowance, which is currently set at £12,500. By cleverly balancing a pension and ISA, you may be able to earn more than the personal allowance before you are charged.

        Imagine that you have previously invested half of your 25% tax-free pension into an ISA. If you receive the maximum State Pension of £8,757 a year, £3,743 of your Personal Allowance is remaining before you owe any tax.

        If you then withdraw an additional lump sum from your DC pension (within the 25% allowance), for example £6,000, then £3,743 of it would count against your remaining Personal Allowance, and the additional £2,257 will be tax-free anyway.

        Balancing ISA and pension income can be advantageous if your income is likely to push you into a higher tax bracket. By making the most of both schemes, you may be able to delay when you start using your taxable pension income.

        ISAs and pensions are very different beasts when it comes to how the funds are passed on after you’ve passed away.

        ISA money can only be inherited tax-free by a spouse of a civil partner – anything beyond that will typically fall within your estate for Inheritance Tax purposes.

        When it comes to pensions, however, if you die before the age of 75, your funds can be passed on tax-free to anyone you want. As this money isn’t generally part of your estate, no inheritance tax is payable.

        If you are considering transferring your pension to an ISA, it is strongly advised to seek professional advice. Get in touch today to speak to a pensions expert.

        Can I transfer my pension into a lifetime ISA?

        lifetime ISA (LISA) allows those aged between 18 and 39 to pay in up to £4,000 a year, and the government will contribute a potential 25% on top. This stops when you turn 50, then the funds can be used towards retirement savings, which you can access at the age of 60. All LISA withdrawals are tax-free.

        If you’re looking to transfer your pension into a LISA in the hope that it will grow your funds, this is not a viable option. Considering that you’re unable to legally access your pension pot until age 55, you will no longer be eligible for the government bonus.

        However, as with standard individual savings accounts, the funds from an existing LISA may be leveraged alongside your pension to help minimise the amount of income tax you have to pay.

        How to transfer a pension fund to an ISA or LISA

        If you decide to transfer some or all of your pension pot into any type of ISA, you will need to contact your pension provider and check that your existing scheme allows you to transfer funds.

        You should also seek professional advice. The independent pensions experts we work with can guide you through the process and offer bespoke advice every step of the way, so make an enquiry here to get the ball rolling on your transfer.

        As you are unable to move funds directly to an ISA, you will need to arrange for the funds to be temporarily transferred to an alternative account. Depending on the provider, this can take a matter of days or weeks to process.

        Once you have withdrawn the funds, you can then proceed to transfer them into your chosen ISA.

        Speak to a pensions expert about your ISA transfer

        Before making any decisions when it comes to transferring your pension ISA, it’s always advisable to speak to an expert if you want the most beneficial financial outcome.

        The specialists we work with can provide you with the most up to date advice, tailored specifically to your circumstances.

        Give us a call on 0808 189 0463, or contact make an enquiry to arrange a no-obligation chat with a member of the team.

        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.

        FCA Logo
        1 of 2
        2 of 2 Send!
        Tony Stevens

        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.

        Continue Reading

        Chevron Right Pension Transfers Overview

        Chevron Right A Complete Guide to Pension Transfers

        Chevron Right Mis-Sold Pension Transfers

        Chevron Right Pension Transfer Values

        Chevron Right TUPE Transfer Pensions

        Chevron Right A Guide to Nest Pension Transfers

        Chevron Right A Guide to Pension Transfer Options

        Chevron Right A Guide to Police Pension Transfers

        Chevron Right A Guide to Protected Rights Pension Transfers

        Chevron Right Brexit and Pension Transfers

        Chevron Right Bulk Pension Transfers

        Chevron Right Can I transfer my pension into property?

        Chevron Right Can I Transfer My Pension Myself?

        Chevron Right Can I Transfer my Pension to Another Person?

        Chevron Right Civil Service Pension Transfers

        Chevron Right Deferred Pension Transfer

        Chevron Right Defined Benefit Pension Transfers

        Chevron Right Final Salary Transfer

        Chevron Right Getting the Best Pension Transfer Deals

        Chevron Right Guaranteed Minimum Pension (GMP) Transfer

        Chevron Right How Long Should a Pension Transfer Take?

        Chevron Right How to transfer a British Steel pension

        Chevron Right How to Transfer An ISA Into a Pension

        Chevron Right New Zealand Pension Transfers

        Chevron Right NHS Pension Transfers

        Chevron Right Occupational pension transfers

        Chevron Right Pension Protection Fund Transfers

        Chevron Right Pension Risk Transfer

        Chevron Right Pension Transfer Advice

        Chevron Right Pension Transfer After Divorce

        Chevron Right Pension Transfer Fees & Charges

        Chevron Right Pension Transfer Ireland

        Chevron Right Pension Transfer Rules

        Chevron Right Pension transfers from UK to Spain

        Chevron Right Pension Transfers India

        Chevron Right Pensions transfers upon death

        Chevron Right Private Pension Transfers

        Chevron Right QROPS Pension Transfers

        Chevron Right SERPs Pension Transfers

        Chevron Right Should You Transfer Your Pension?

        Chevron Right Stakeholder Pension Transfer

        Chevron Right State Pension Transfer

        Chevron Right Teacher Pension Transfer

        Chevron Right Transfer Army Pension

        Chevron Right Transfer Local Government Pension

        Chevron Right Transfer Overseas Pension To The UK

        Chevron Right Transfer Pension Abroad

        Chevron Right Transfer Pension From Previous Employer

        Chevron Right Transferring a Pension into an ISA

        Chevron Right Transferring a Pension to a New Provider

        Chevron Right Transferring a Pension to Another Provider

        Chevron Right Transferring a Section 32 Pension

        Chevron Right Transferring a UK pension to France

        Chevron Right Transferring Defined Contribution Pensions

        Chevron Right Transferring Pensions Into One

        Chevron Right Transferring Small Pension Pots

        Chevron Right Transferring Workplace Pensions

        Chevron Right UK pension transfer to Canada

        Chevron Right UK Pension Transfer to Australia

        Chevron Right UK Pension Transfer to USA Providers

        Chevron Right Where Can You Transfer Your Pension To?

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us as well as any of our own are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.