PTM100010 - Transfers: essential principles
Source: gov.uk (2025-08-13)


Glossary

PTM000001 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm000001)

What is a transfer? (#IDA4QLSG) What is a recognised transfer? (#IDAHSLSG) Statutory right to transfer (#IDACVLSG) Where benefits can be transferred to (#IDAUVLSG) When can benefits be transferred? (#IDA1XLSG) The date of transfer (#IDAWYLSG) Member exercises cancellation rights in a 'cooling-off' period (#IDACZLSG) Form of transferred rights (#IDAKZLSG)Transfers must be made between pension schemes (#IDAK0LSG) Tax treatment of a transfer (#IDAE1LSG)Partial Transfers (#IDAGAMSG)

What is a transfer?

A transfer is the movement of an individual's pension rights from one scheme to another. The transferred funds become subject to the rules of the receiving pension scheme and that scheme then becomes responsible for paying the member's benefits.

There are number of reasons why a member's pension savings may be transferred to or from a registered pension scheme; here are just a few:
- the pension scheme is being wound up
- the member is no longer employed by the employer that set up that scheme, and wants all benefits to be provided under their new employer's pension scheme
- the member wants to transfer to a pension scheme that has a different range of pension payment options. For example their existing scheme only pays pension as a lifetime annuity whilst the proposed new scheme also allows pensions to be paid as a flexi-access drawdown.
- an ex-spouse or former civil partner has been given a pension credit under a pension sharing order and wants to transfer it to a different pension scheme.
Pension rights can be transferred to another pension scheme without unauthorised payments tax charges if the transfer is a recognised transfer.

What is a recognised transfer?

Section 169 Finance Act 2004

For a transfer to another pension scheme to be a recognised transfer the transferring funds must:
- become held for the purposes of the receiving scheme providing benefits in respect of the transferring member, and
- be transferred to either another registered pension scheme or a qualifying recognised overseas pension scheme.
The definition of a registered pension scheme includes a deferred annuity contract.

A transfer of funds from a registered pension scheme to an insurance company will be a recognised transfer if those funds had been used by the pension scheme to provide either a scheme pension or dependants' scheme pension.

A transfer from a registered pension scheme to a
- vehicle that is a not a pension scheme
- UK pension scheme that is not a registered pension scheme, or
- non-UK scheme that is neither a registered pension scheme nor a qualifying recognised overseas pension scheme
is not a recognised transfer. The transfer will be an unauthorised payment - see PTM130000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm130000).

If the transfer includes a transfer of a pension in payment extra conditions apply. If these conditions - see PTM104000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm104000) to PTM107000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm107000) - are not met the transfer will not be a recognised transfer. For the avoidance of doubt a pension in payment includes funds designated by a member or beneficiary into a drawdown pension fund or flexi-access drawdown fund.

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Statutory right to transfer

Sections 93 to 101 Pension Schemes Act 1993

Under Chapter 1 of Part 4ZA Pension Schemes Act 1993 certain members have the right to a ‘cash equivalent’ of their rights under the scheme. This means that should the member wish to transfer out of the scheme, their accrued entitlement under the scheme must be calculated and valued, and assets equal to that monetary value must be made available for transfer. This is sometimes referred to in the pensions industry as the cash equivalent transfer value, or CETV.

Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021- SI 2021/1237 - for statutory transfers initiated on or after 30 November 2021 the statutory right for members to transfer pension benefits to another pension scheme will only be exercised when certain conditions are met.

This legislation is the responsibility of the Department for Work and Pensions (DWP), not HMRC.

The member’s rights under Pension Schemes Act 1993 do not override the tax legislation.

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Where benefits can be transferred to

Section 169 Finance Act 2004

Regulation 2 The Registered Pension Schemes (Authorised Payments) (Transfers to the Pension Protection Fund) Regulations 2006 - SI 2006/134

Regulation 2 The Financial Assistance Scheme (Tax) Regulations 2010 - SI 2010/1187

The tax legislation doesn't put any limit on where pension rights can be transferred to. But a transfer from a registered pension scheme will be an unauthorised payment unless it is a recognised transfer, or a transfer to either the Pension Protection Fund (PPF) or the Financial Assistance Scheme (FAS).

This means that in practice most schemes will only transfer to another registered pension scheme, a qualifying recognised overseas pension scheme, PPF or FAS.

Tax legislation is not the only legislation governing pension scheme transfers. For example for contracted-out schemes Department for Work and Pensions (DWP) legislation provides that contracted-out rights can only be transferred to pension schemes eligible to hold such rights.

A registered pension scheme may accept a transfer from any type of pension scheme, that is:
- another registered pension scheme
- a UK pension scheme that is not registered
- a qualifying recognised overseas pension scheme, or
- any other type of non UK pension scheme
The section Tax treatment of a transfer (#IDAE1LSG) below explains how the transfer in should be treated.

Sections 94 and 95 Pension Schemes Act 1993 & Section 1(8) Welfare Reform and Pensions Act 1999

DWP legislation may give a member a statutory right to transfer benefits out of a scheme, but a pension scheme is not required to accept a transfer. The exception to this rule is that stakeholder pension schemes are required to accept transfers from other registered pension schemes.

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When can benefits be transferred?

Subject to the pension scheme rules, a member can transfer their pension rights at any time. There is no lower or upper age limit for making a transfer.

Benefits in payment may be transferred, but there are extra conditions that must be met if the transfer is to be a recognised transfer - see PTM104000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm104000) to PTM107000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm107000).

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The date of transfer

The date that a transfer takes place is a legal question. It will be the point when a clear agreement is in place such that both schemes accept that the beneficial or equitable interest under the registered pension scheme has been transferred. This will include the completion of any transfer application and acceptance process.

The fact that the conveyance of any legal title to any assets being transferred may not have been completed does not alter the above. This follows an understanding of law that it is not necessary to complete the formalities of transferring the legal title to an asset to convey the underlying beneficial interest. As a test of effectiveness, it should be considered that if the member died on a particular date would death benefits be payable from the transferring registered pension scheme.

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Member exercises cancellation rights in a 'cooling-off' period

If the member recently joined the scheme receiving a transfer, under FCA rules they may have the right to cancel the contract under a cooling-off provision. If the member exercises their right and cancels the contract within the cooling-off period the transaction is treated as not having taken place. Any transferred funds should be returned to the original pension scheme.

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Form of transferred rights

A transfer can be made:
- as cash,
- by assignment of insurance policies,
- as an asset (in specie),
or any combination of these, provided the cash and assets transferred represent the full value of the member's rights to be transferred.

Transfers are valued in cash terms. If a transfer involves an asset (for example, a property or a work of art) being transferred between pension schemes, that asset must be valued in cash terms by an appropriately qualified independent person before being transferred.

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Transfers must be made between pension schemes

Section 266 Finance Act 2004

To be a recognised transfer the transfer must be made direct to the registered pension scheme or qualifying recognised overseas pension scheme receiving the transfer. Scheme administrators should ensure the person to whom they are transferring funds is someone with a position of responsibility in the receiving scheme.

If the receiving scheme is an insured scheme, in addition to being paid to the scheme administrator the transfer can also be paid to the insurance company that issues any of the policies held by the receiving scheme. An insured scheme is one where the only scheme investments are policies of insurance. Failure to comply with this requirement may make the scheme administrator of the transferring scheme liable to a penalty of up to £3,000.

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Tax treatment of a transfer

Transfer out

As long as the transfer is a recognised transfer or to either the PPF or FAS a transfer from a registered pension scheme will be an authorised payment.

If the transfer from a registered pension scheme is neither a recognised transfer nor made to either PPF or FAS the payment will be an unauthorised payment. Tax will be due on the unauthorised payment - see PTM131000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm131000). The scheme administrator should also file an Event Report in respect of the unauthorised payment - see PTM161000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm161000).

A transfer out may affect the calculation of the member’s pension input amount under the transferring scheme - see PTM053000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm053000).

If the member has a valid enhanced allowance protection (enhanced protection, fixed protection, fixed protection 2014 or fixed protection 2016) prior to 15 March 2023 then a protection cessation event cannot cause the member to lose their enhanced allowances protection.

If the member has applied for an enhanced allowance protection after 15 March 2023 and it has been accepted, or the member has a protection of a pension age below normal minimum pension age, a transfer may cause them to lose this protection. For more information see:
- enhanced protection - PTM173640 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm176340),
- fixed protection, fixed protection 2014 and fixed protection 2016 - PTM176440 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm176440),
- protected pension age - PTM062240 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062240),
- scheme specific lump sum protection - PTM063150 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm063150).
Section 216 Finance Act 2004

A transfer from a registered pension scheme to a QROPS may be subject to an overseas transfer charge. For more information about the overseas transfer charge and when it arises go to PTM102200 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm102200).

Schedule 34 Finance Act 2004

Transfers from a relevant non-UK scheme may have UK tax charges applied to them in certain circumstances - see PTM113210 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm113210). The most common circumstance is if the transfer would be an unauthorised payment if it had been made from a registered pension scheme.

Transfers from a QROPS, or former QROPS, to another QROPS may also be subject to an overseas transfer charge. From 6 April 2024, a transfer from a relieved relevant non-UK scheme to a QROPS may also be subject to an overseas transfer charge. For more information about the overseas transfer charges and when they may arise in relation to a transfer go to PTM102200 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm102200).

Transfer in

Section 188(4) & (5) Finance Act 2004

A transfer is merely the relocating of pension rights from one scheme to another, so receipt of a transfer by a pension scheme is not a contribution. The only exception to this rule is that a pension credit that has been transferred in from a pension scheme that is not a registered pension scheme may be treated as a contribution.

A transfer in may affect the calculation of the member’s pension input amount under the receiving scheme - see PTM053000 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm053000).

Section 224 Finance Act 2004

If the transfer in comes from a recognised overseas pension scheme the member may be able to claim an enhanced factor - see PTM172100 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm172100).

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Partial Transfers

A partial transfer could be:
- part transferred to a new scheme and part retained under the old scheme, or
- scheme funds transferred to more than one scheme at the same time.
If the scheme rules allow, it is possible for only part of a member’s uncrystallised rights to be transferred out as a recognised transfer (subject to the other conditions for a recognised transfer being met).

A partial transfer of a pension in payment will be an unauthorised payment.

Partial transfers may cause the member to lose (or have reduced) their lifetime allowance protection (see the section above), scheme specific lump sum protection or pension age protection. The relevant guidance is at:
- enhanced protection - see PTM176340 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm176340),
- fixed protection and fixed protection 2014 - see PTM176440 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm176440),
- protected pension age - see PTM062240 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062240),
- scheme specific lump sum protection - see PTM063150 (https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm063150).