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Can I Transfer My Pension to My Bank Account?

Written by, Marija Petkova

Updated July, 19, 2023

A pension transfer is a great way to get more out of your retirement savings. 

But, how do pension transfers work, what are the drawbacks, and can I transfer my pension to my bank account? 

Let’s dive in.

What is a Transfer of Pension Fund?

The process of a pension transfer usually involves moving pension funds from one scheme to another.

Pension transfers are not uncommon, but before you make a final decision, it’s best to do some research and speak to a specialist that can explain the rules and regulations and guide you through the process. 

Note that transferring your pension to a different provider is not the same as withdrawing the money or sending it into your bank account. Normally, you can cancel your pension and take out funds from your pension pot once you turn 55. 

How Does a UK Pension Transfer Work?

A pension transfer can be a great way to simplify your retirement planning and potentially increase your overall savings. But it’s important to do your homework and gain a better understanding of your pension transfer options to make sure you’re getting the best deal for yourself. 

To transfer a pension pot, you must submit a written request to the scheme administrator or pension provider, informing them that you want to move your funds.

Your scheme administrator or pension provider will then give the following information: 

  • A document that specifies your transfer value
  • Any extra benefits that you’ve accumulated under the plan
  • Possible exit charges
  • Any other information you need if you choose to go ahead with the pension fund transfer

You might need expert advice if you are:

  • A member of a defined benefits pension plan and you have more than £30,000 in your pension pot. A defined benefit pension transfer to a defined contribution scheme usually means giving up your income for life in return for cash. 
  • A member of a defined contribution plan in which the fund exceeds £30,000 and you are eligible for a guaranteed annuity rate.

Can I transfer my pension to my bank account? 

Transferring your pension to your bank account means withdrawing the money from the pension funds.

If you’re older than 55, you may withdraw only a quarter of your retirement pot as a tax-free lump sum. The rest will be taxed as income. You can also opt for a pension drawdown and keep the rest of the funds invested.

When Can You Transfer a Pension Pot?

A defined contribution pension can be moved at any time to another scheme or pension provider.

However, if you want to withdraw money from the pension fund to your bank account and you’re under the age of 55, you might have to pay a penalty and tax on the entire sum.

Why Do People Transfer Their Pensions?

Here are some of the most common reasons people opt for a pension transfer. 

  • Reduced fees for overseas contributions.
  • Transferring pensions into one scheme can make it easier to manage your pension.
  • Transferring pensions to a cheaper scheme.
  • Some schemes are more flexible than others. 
  • Better final salary plan.
  • Better stock-market returns and more freedom when it comes to how much you put in and what you can access (personal pensions)

Is Transferring Pension Funds a Good Idea?

There is no one-size-fits-all answer. Transferring a pension can be a good idea if you’re looking for a more flexible or cheaper scheme, but whether it’s worth it, depends on your circumstances and the type of pension plan that you have.

There are usually exit fees associated with the process of moving a pension, which can be quite high in certain cases, and you also might lose important benefits by transferring to a cheaper plan.

It’s always important to speak with an expert before making any decisions.

Bottom Line

Pension transfers can be a smart choice for certain individuals who want to maximise their retirement income and have greater flexibility and control over their pension funds. When it comes to moving your pension to a bank account, that often means withdrawing funds from your pension pot, which is different from regular pension transfers. Normally, you’ll have to wait until the age of 55 to take out funds.

Frequently Asked Questions And Their Answers

Does it cost money to transfer your pension?

You may need to pay a pension transfer fee in the form of an exit fee depending on your plan’s rules. When you attempt to withdraw your retirement funds, your present pension provider will charge you an exit fee, which will be deducted from the amount remaining in your pension.

When can I transfer my pension?

In most cases, you can move your defined contribution pension at any time before you start taking money out of it.

Can I transfer my pension to a savings account?

Pension transfers usually involve moving pension funds from one scheme to another. Moving the funds to a savings account is more similar to withdrawing money from it. 

Can I transfer my pension to my bank account?

Transferring your funds to a bank account usually means withdrawing money from the pension pot and can normally be done after the age of 55.

My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.