Why are more people transferring their pensions now?

I’ve read that the new ‘pension freedoms’ have led to a rise in the number of pension transfers. Why is this? What’s the connection?

Question asked by Mark Devon
Are You Pension Happy?
Call us on 02084327334
I know how much my pension is worth
I know how much my pension costs
I have clear financial goals for my retirement

Answered by Stephen Moore

Freedom of choice

The ‘pension freedoms’ completed the 20-year evolution of what’s known as ‘income drawdown’. This is the chief alternative to taking a set level of tax-free cash at retirement (the maximum is usually 25%) and using your remaining pension pot to buy an annuity.

Under income drawdown, your pension pot remains invested where it can continue to grow tax free. You access it by ‘drawing down’ tax-free lump sums or a taxable income as and when they might be needed.

Time to get ‘flexi’

The pension freedoms essentially increased the flexibility of income drawdown arrangements by replacing the two previous type of contract – known as ‘flexible’ and ‘capped’ – with a new type of contract called ‘flexi-access drawdown’.

The pension freedoms also abolished the previous 55% ‘death tax’ on pensions meaning that those who die before age 75 can pass their (money purchase) pension wealth along to their beneficiaries tax free. The beneficiaries of those who die after age 75 will be subject to income tax on any pension funds they might inherit.

With new flexi-access drawdown you can:

  • Cash in your whole pension pot with the first 25% tax free and the rest subject to your marginal rate of income tax
  • Take up to 25% of your pension as a tax-free lump sum (or more if you have a protected lump sum)
  • Take a series of lump sums as and when you might need them
  • Leave all your pension pot invested until you need it
  • Drawdown a regular taxable income
  • Start taking benefits from age 55 or earlier in the case of ill health
  • Continue contributing up to £4,000 a year to your existing pension plan
  • Pass your pension savings to your loved ones in a tax-efficient way  

For many, these increased freedoms have made it more attractive than ever before to take control of their own pension savings and this is what’s driving the rise in pension transfers, despite the new law requiring that all those contemplating a transfer from a final salary scheme worth more than £30,000 need to seek professional financial advice.

pension transfer advice
flexi-access drawdown
money purchase transfers
final salary pension transfers
This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
Start your journey today...
  Find out how a Drewberry financial adviser can help you reach your destination by making the most of your finances.
Call us on 

Frequently Asked Pensions Advice Questions

My boss has told me that we are going to be automatically enrolled in a pension scheme through work,...
Is it possible to transfer my personal pension to my ISA? Are there any problems with...
I am an IT contractor with my own limited company contracting into other companies for work. I was wondering...
My daughter was recently approached by a company claiming it could transfer her pension benefits before...
Need Help? Live chat now and get an instant answer from our Experts...


Our Latest Reviews
Matthew Draper

Excellent service at convenient times of the day specified by me. All product options were clearly outlined and I am very pleased.

Paul Devine

First class service. Helped me through the process from start to finish. Egle and Francis were very professional and talked me though all my options. Once the policies were set up, the after care after was also first class. Highly recommend. 5 stars all day long.

Josip Marjanovich

Victoria was very helpful about selection of suitable insurance. She always answered all questions in a timely manner.

We are rated 4.9/5 based on 1512 independent client reviews.
To read more of our independent client reviews click here →
4.93 / 5 Average
652 Reviews
Verified Buyer
Overall Rating
The whole process was a pleasure. Drewberry we're easy to deal with, polite, knowledgeable and helpful
Verified Buyer
Overall Rating
Very good, clear service would recommend to friends and family
Overall Rating
Sam Carr provided an efficient and professional service.
Verified Buyer
Overall Rating
Sam Carr provided a professional but enthusiastic service and helped make the whole process very straight forward. Goodness knows I have been through enough application forms recently. My insurance product was never going to be easy to find and I had been rejected on a number of other occasions through others ironically due to well managed common health conditions. I identified Drewberry in a last and disappointing trawl on th web to find someone that actually wanted to take on a difficult case like me. Some brokers wouldn't even consider me. When we applied for my first choice product Sam wasn't at all deterred by the long wait for my GP report or the final rejection that came back from the insurer, sadly I have become used to it. Within a day he had lined up the second choice and to my surprise he had hit the nail on the head and introduced me to the correct insurer and terms for my needs whilst nogotiating an excellent premium. I am extremely satisfied with what Sam has achieved for me and I would have no hesitation in recommending either him or Drewberry to friends, family and and business contacts. In the future, Drewberry will be my first point of contact. Many thanks!
Overall Rating
Tailored to my need and the staff gave very good service