Can you transfer a drawdown pension to another provider?

Yes, you can transfer a drawdown pension to another provider, but the whole drawdown fund must move and the transfer adds no new tax-free cash.

Free help comes first: MoneyHelper's Pension Wise service, impartial and backed by government, takes you through the ways of drawing on a defined contribution pot. The detail lies in your own fund and tax position. An FCA-authorised adviser, reached free by sending the enquiry form here, can cover them on a call-back.

Can I transfer a drawdown pension to another provider?

Yes. HMRC's Pensions Tax Manual says it is possible to transfer the sums and assets held in a drawdown fund, including a flexi-access drawdown fund, to another pension scheme. Its general guidance adds that "Subject to the pension scheme rules, a member can transfer their pension rights at any time. There is no lower or upper age limit for making a transfer." Benefits in payment "may be transferred, but there are extra conditions that must be met if the transfer is to be a recognised transfer", meaning one that moves pension rights between schemes without an unauthorised-payments tax charge.

The other end has a say too. A pension scheme "is not required to accept a transfer", the manual says, except that stakeholder pension schemes must accept transfers from other registered pension schemes. GOV.UK tells you to check that your scheme "allows you to transfer some or all of your pension pot" and that the new one "will accept the transfer". The steps are in how to transfer a pension, with transferring after 75 and pension drawdown for background.

Drawdown to drawdown transfer rules: the whole fund moves

On top of the normal rules for a recognised transfer, the drawdown chapter says the transfer "will only be a recognised transfer if all the sums and assets of the relevant drawdown fund are transferred as part of the transfer", and that "A transfer of only part of one of the types of drawdown funds listed above cannot be a recognised transfer." The general chapter states the consequence: "A partial transfer of a pension in payment will be an unauthorised payment." Money not yet in drawdown is treated differently (see below). The tax side is in tax on a pension transfer and, for withdrawals afterwards, pension drawdown tax.

The money must also land in a new arrangement with the receiving provider, one "that holds no other sums or assets", so it is not simply added to a pot you already hold there. FCA rules for drawdown providers expressly cover a client who "requests to transfer sums to the drawdown provider from another provider". Which firms will take yours is for each firm to say; an FCA-authorised adviser can list the questions worth asking if you request a call-back.

What stays the same after a drawdown transfer?

The money stays crystallised: the manual counts money designated into drawdown as a pension in payment, and PTM104000 says "No entitlement to a pension commencement lump sum can arise from the transfer." So the transfer is not a second chance at tax-free cash on money already in drawdown; taking your tax-free lump sum explains when that cash is available. A fund used for drawdown under the new scheme "must be on the same basis", so flexi-access stays flexi-access, though there is "no requirement that a transferred drawdown fund must be used to provide drawdown pension under the new scheme" (see switching to an annuity).

Older capped drawdown can move "without triggering the money purchase annual allowance rules" and, without a specific nomination, stays capped. If you ask for flexi-access on transfer, the money purchase annual allowance rules apply, unless they already do, just before the first payment from the flexi-access fund under the new scheme. See flexi-access versus capped drawdown and the money purchase annual allowance.

Cash or in specie: how a drawdown fund is moved

A transfer can be made in cash, by assignment of insurance policies, "as an asset (in specie)", or by "any combination of these, provided the cash and assets transferred represent the full value of the member's rights to be transferred". For a fund held in investments, the practical question is whether they travel as they are or are turned into cash on the way; in specie transfers explains the first. Whether a provider will take yours in specie, and what it charges to do so, is for both firms to confirm in writing; you can also raise it when the FCA-authorised adviser rings after you submit the enquiry form.

The new firm then needs investment instructions. With some exceptions, the FCA requires a firm receiving a non-advised client's request to transfer "sums or assets already in drawdown" to give "the opportunity to use the investment pathways", described in choosing a drawdown provider. The pot stays invested, and MoneyHelper's warning applies: "As your pension remains invested, its value can rise and fall until you take the money. This means your retirement income is not guaranteed."

What can it cost to move a drawdown pension?

GOV.UK says a transfer may carry a fee, and MoneyHelper says some providers charge an exit or transfer fee for moving money to a new scheme. Ask each firm what applies to you and get it in writing.

For personal and stakeholder pensions the FCA limits "early exit charges", which its glossary defines as charges on someone past normal minimum pension age who transfers, takes or converts benefits before the scheme's expected retirement date. Under COBS 19.6A none may apply to benefits under contracts or arrangements a member joined from 31 March 2017 onwards. On older contracts it cannot exceed 1% of the value being transferred, or a lower amount if the scheme set one at 31 March 2017; where the scheme made no provision then, there can be no charge. Charges excluded by regulations made in 2016 (SI 2016/1079) fall outside these limits. More on costs: pension transfer fees and pension charges.

Can I transfer a pension fund into drawdown?

If the pot is untouched, yes, by two routes: start drawdown where it is now and move the resulting fund (the whole-fund rule applies), or move the pot first and start drawdown with the new provider. The manual says "If the scheme rules allow, it is possible for only part of a member’s uncrystallised rights to be transferred out as a recognised transfer", provided the other recognised-transfer conditions are met, so the second route can be done in part. Asking the new firm to designate "some, or all, of the sums or assets" into drawdown brings the same investment-pathways steps.

The sequence changes what you can take and keep. Setting up drawdown and taking tax-free cash before transferring the rest cover the choices, and the order that suits your own pots can be gone over, free, by an FCA-authorised adviser once you send this page's short enquiry form.

Checks before you move a drawdown pension

GOV.UK says a transfer may mean you "lose any right you had to take your pension at a certain age" or "lose any fixed or enhanced protection you have when you transfer"; ask both providers, and see protected pension age on transfer. HMRC's manual adds that a recognised transfer must go to another registered pension scheme or a qualifying recognised overseas pension scheme; otherwise it is generally an unauthorised payment and tax is due.

The FCA says scam offers often aim to persuade you to transfer your pension pot, and lists as a warning sign several groups "all taking a fee, which means the total amount deducted from your pension is significant". Check the firm is authorised with the FCA's Firm Checker and read the FCA's pension scams page. Checks and timings: pension transfer rules, how long a transfer takes.

To have the fund, its charges and the tax looked at side by side before deciding, fill in the call-back form here. An FCA-authorised adviser then phones, and that first conversation carries no charge.

Questions about transferring a drawdown pension

Is there an age limit for moving a drawdown pension?

HMRC's manual says there is "no lower or upper age limit for making a transfer", subject to the scheme's rules.

Can I get more tax-free cash by transferring?

Not from the transfer itself. HMRC's manual says it creates no entitlement to a pension commencement lump sum, the payment HMRC elsewhere describes as "a tax-free lump sum".

Do I pay tax when I move a drawdown fund?

HMRC says a recognised transfer can be made "without unauthorised payments tax charges"; a partial transfer of a pension in payment is an unauthorised payment. Tax on withdrawals is in pension drawdown tax.

Which pension providers accept crystallised funds?

The FCA's rules deal with a client moving drawdown money in from another provider, but each firm decides whether to take it. Ask the firm you have in mind.