WEEKEND WEB; Drawdown to drawdown pension transfers
SCOTT WOODS writes his global finance column, MONEY MATTERS
Both capped drawdown and flexi-access drawdown funds can be transferred and there’s no restriction on when, or how often, ‘drawdown to drawdown’ transfers can be made.
This doesn’t just apply to the original member; beneficiaries can also transfer drawdown funds that they’ve inherited.
However, it’s not possible to partially transfer drawdown funds under an arrangement, all drawdown funds under the arrangement must be transferred.
But if there are multiple drawdown arrangements under a scheme, they don’t all have to be transferred.
If a partial transfer is made from drawdown funds under an arrangement, this is treated as a non-recognised transfer which is taxed as an unauthorised payment.
The transferred drawdown funds must be ring-fenced and held separately from any other funds the pensioner has under the scheme receiving the transfer.
Transfers in drawdown when below age 55 are also permitted. Anyone under age 55 who relied on a protected low pension age to access their benefits can transfer their drawdown funds after the 5th April 2015 and continue taking income before age 55.
But care needs to be taken for such transfers that took place pre-6th April 2015. The member could face unauthorised payment charges if they continue taking income before age 55, unless it was part of a block transfer (or was transferred to another scheme with a protected pension age).
Anyone who went into drawdown when they met the old minimum pension age of 50 (pre- April 6 2010) and who transferred after April 5 2010 whilst still under the new minimum age of 55, could continue to take income from the new scheme without incurring unauthorised payment charges.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.