How do I transfer an existing drawdown pension?
You can choose to transfer your pension as cash, which means selling your investments before the process starts, or you might be able to transfer your pension without selling anything (if your new provider offers the same investments).
Transferring as cash means you’ll be out of the market, so you won’t benefit from any market rises, but you won’t suffer from any falls either. It’s often the cheaper option and the most popular choice among our clients. You’ll be free to reinvest your money as you wish once the transfer’s complete.
If you’d prefer to transfer your investments, you should bear in mind you won’t be able to make any changes to your investments until the transfer’s complete.
If you want to transfer a capped drawdown plan to the HL SIPP, you’ll have the option to convert to flexible drawdown (where income isn’t restricted) when you apply. Remember though, this is an irreversible decision, and means contributions into money purchase pensions (such as your SIPP) will be restricted by the Money Purchase Annual Allowance (MPAA) – currently £4,000 per tax year.
Before transferring, check with your existing provider that you won’t lose any valuable benefits, or need to pay high exit fees. We’d also recommend you arrange for any planned income to be paid before the transfer starts, as income can’t be paid while a transfer’s in progress.