No: a final salary pension cannot pay drawdown itself. Final salary pension drawdown is possible only once its value moves to a defined contribution pot.

Free guidance exists, with a catch. Pension Wise is free, impartial and backed by government, according to MoneyHelper, but it is aimed at defined contribution pots, and GOV.UK says it does not cover "final salary" pensions, so your scheme is the first place to ask. Your own scheme, tax and options can be talked through on a phone call that costs nothing, booked through this page's short form, with an FCA-authorised adviser making the call.

Can you take drawdown from a defined benefit pension?

Not directly. Under the tax rules, HMRC's Pensions Tax Manual says, "Drawdown pension can be paid only from other money purchase and cash balance arrangements. Defined benefits arrangements cannot pay drawdown pension." A final salary scheme promises a set income, so there is no pot for the scheme to let you dip into.

Instead, GOV.UK explains, a defined benefit scheme pays a guaranteed yearly amount, and you may be able to take some of it as tax-free cash (check with the scheme). Those are the scheme's own forms of payment; the other choices it may give, such as an earlier or later start, are in final salary pension options. Anyone looking for defined benefit drawdown is looking for something that only exists outside the scheme, and the next sections explain how that works.

Defined benefit pension vs drawdown: where the difference lies

The two work in opposite ways, which is why one cannot simply be switched into the other.

  • A defined benefit pension pays a guaranteed amount each year, set by the scheme's rules. You do not choose how much comes out, and you do not carry the investment risk.
  • Drawdown takes money from a defined contribution pot. The FCA points out that the pot's value goes up or down with its investments, and you decide what to take out and when.

That flexibility is what draws people to drawdown, and the lost guarantee is what it costs. For the general mechanics of drawdown see pension drawdown.

Workplace pension drawdown: it depends which kind of scheme you are in

The words workplace pension and occupational pension are only labels for a pension arranged through an employer, so neither tells you whether drawdown is possible. What matters is the type of scheme underneath. In a defined contribution workplace scheme you decide how to take your money, and drawdown may be one of the ways; HMRC's manual adds that no scheme is obliged to pay drawdown pension, and many do not offer it. GOV.UK says a pot can be transferred to another registered UK pension scheme, once you have checked that your scheme lets you transfer and that the receiving scheme will take the money.

If your employer's scheme has more than one section, the tax manual's wording matters: drawdown is available from "money purchase and cash balance arrangements", so it is the type of benefit, not the name of the scheme, that decides. The scheme administrator can confirm which you hold, and how to check whether your pension is final salary walks through the clues. If you cannot tell which part of your pension is which, a ring-back requested on the form below lets an FCA-authorised adviser sort through the scheme paperwork with you, free.

Drawdown from a final salary pension means a transfer first

To get drawdown, the scheme has to pay the value of your benefits into a defined contribution arrangement, and income is then drawn from that pot. That is a pension transfer, and the regulators start from the other side of it: the FCA and The Pensions Regulator "believe it’s in most people’s best interests to keep their DB pension", and the FCA reminds readers that you "can’t reverse a transfer".

Seen from the drawdown end, the change is about who carries the risk. While you stay in the scheme, it pays a set amount for life and the investment risk is not yours. Once the money is a pot, the FCA's list of transfer risks applies to you: the pot may fall in value as well as rise, your retirement income may be lower if it does, and the money "may run out" while you are still alive. The lifetime income for you and your dependants, and the scheme's inflation protection, are given up. Drawdown lets you choose how fast to draw; it also leaves the consequences of drawing too fast with you.

The law adds a step before any money moves. A final salary pension is a "safeguarded benefit" under section 48 of the Pension Schemes Act 2015, which covers benefits other than money purchase and cash balance ones. The scheme must confirm you have had appropriate independent advice unless, on the valuation date, the transfer value of those safeguarded benefits is no more than £30,000 (regulation 5 of SI 2015/742). That transfer value is the cash equivalent of the rights, leaving out any reduction to initial cash equivalents permitted under the transfer value regulations. How the check works is in the transfer advice requirement.

For some members the door is shut. MoneyHelper explains that members of an "unfunded" public sector scheme, the Teachers’ Pension Scheme and NHS Pension Scheme among them, can move their pension only into another defined benefit scheme, so drawdown cannot be reached by transferring.

Anyone weighing a move can start with the figure the scheme quotes (how a transfer value is worked out) and the arguments for and against in should I transfer my final salary pension?

Questions about final salary pensions and drawdown

Can I keep my final salary pension and use drawdown on another pension?

Yes, if you also have a defined contribution pot. HMRC's rule stops a defined benefits arrangement paying drawdown; it does not stop a money purchase pot held elsewhere from doing so, provided that pot's scheme offers it. How that works is in pension drawdown, and workplace pension rules covers the employer schemes many such pots sit in.

Does Pension Wise cover a final salary pension?

No. GOV.UK sets its scope to leave out "final salary" and "career average" pensions, along with the State Pension. It does cover options for defined contribution pots, explained in what Pension Wise is.

Can I cash in a final salary pension instead of using drawdown?

There are limited ways to get cash from a defined benefit scheme without a transfer, such as a scheme lump sum; they are set out in can I cash in my final salary pension? and the final salary lump sum guide.

Why do some firms offer to help me move a final salary pension?

Be cautious about any firm that gets in touch unasked. The FCA warns against dealing with cold callers about your pension and says scams often dangle attractive offers to get people to transfer. See pension scams and the FCA's pension scams page.

Is drawdown better than keeping a final salary pension?

Neither is better for everyone; they trade certainty for flexibility, as defined contribution options at retirement and the final salary pension guide set out. The regulators' starting point is that keeping the pension suits most people.

Your next step

A final salary pension cannot pay drawdown: that needs a transfer to a pot, which is permanent and comes with the risks above. Your scheme can tell you what it offers; if you would like your pension, tax and other income weighed together, put your number in the enquiry form here, after which an adviser holding FCA authorisation will phone you, without charge. Background on how these schemes pay out is in what a final salary pension is.