In the UK, it’s normally free to leave one pension and transfer to another. But depending on your provider and the type of pension you have, you might need to pay some charges. These can include set-up fees, exit fees, and the cost of financial advice.
What fees could I pay when transferring a pension?
When you transfer a pension, the charges you pay will depend on your provider and the type of pension you have. There are a few different fees and charges to be aware of:
Exit fees
- Some providers charge an exit fee when you switch provider, though this is more common with older pension plans.
- If you’re aged 55 or over, exit fees are usually capped at 1% of the value of your pension.
Set-up fees
- A set-up fee covers admin costs for setting up your new plan and processing your transfer.
- Your new provider may charge this when you transfer to them, but it’s not very common.
Annual management charges
- An annual management charge is an ongoing fee paid to your pension provider for managing your plan and is usually charged as a percentage of your pension value.
- Before transferring, it’s important to check what your new charge will be and how it could affect your savings over time.
Example
Your pension is worth £60,000.
Your annual management charge is 0.70%.
You’ll pay £420 per year in management fees.
Financial adviser charge
- You may need or want to pay for financial advice, depending on the type of pension you have and your circumstances.
- You don’t usually need financial advice to transfer a defined contribution pension. However, if you’re transferring a defined benefit pension worth more than £30,000, you must take financial advice.
- The most common ways that advisers are paid are by fixed fee, an hourly rate or by taking a percentage of your pension. That could be a percentage for the initial advice and then an ongoing amount. But their charging structure must be clearly explained to you.
Example
Your pension is worth £40,000.
Your adviser charges 2% for initial transfer advice.
Your adviser gets £800.
How much can a pension transfer cost?
Here’s a typical look at what different pension transfer charges might cost:
| Fee or charge | What you're likely to pay | More details |
| Exit fees | Often capped at 1% | Many providers don’t charge an exit fee. For older pensions, if you’re aged 55 or over, this is capped at 1%. |
| Set-up fees | £0 | Most providers don’t charge a set-up fee to attract new customers, but it’s important to check before making a decision. |
| Financial advice | 1 to 3% initial 0.5 - 1% ongoing |
Financial advice taken for pension guidance usually costs between 1 and 3% for initial advice, and 0.5% and 1% for ongoing advice. |
| Annual management charge (AMC) | Typically, 0.5% to 1% | An annual management charge can vary depending on the type of pension and your provider but typically falls between 0.5% and 1% for defined contribution pensions. Workplace pensions are usually capped at 0.75% for default funds. |
Is it worth paying the fees required to transfer a pension?
It depends. In some cases, paying pension transfer charges could be worthwhile if the long-term benefits outweigh the cost. It might be worth paying these if:
- You move to a pension with lower ongoing charges.
- You could access investment options that better suit your goals.
- You get a clearer view of your pension savings.
- You make your pension easier to manage.
- You reduce the risk of losing track of old pensions.
- You can access more flexible retirement or pension death benefit options.
Remember, you might lose valuable benefits such as the right to access your pension at an earlier age, a guaranteed income in retirement and a higher amount of tax-free cash when transferring.
It’s important you understand the costs as well as the risks before making a decision. More information on the risks and benefits can be found in our guide: Should I transfer my pensions?
Key pension transfer terms explained
Pension transfer value
The amount your provider says your pension is currently worth and could be transferred for.
Pension fund value
The current value of your pension savings, including contributions and any investment growth.
Cash equivalent transfer value (CETV)
The amount a defined benefit (final salary) pension scheme may offer if you transfer to a defined contribution pension.
Frequently asked questions
Will I lose money when transferring my pension?
Possibly. You might have to pay charges when transferring your pension, and you could lose valuable benefits.
Do I need financial advice before transferring my pension?
Not always. For most defined contribution pensions, taking financial advice is optional. However, you must take financial advice before transferring defined benefit pensions if they're worth more than £30,000. It’s important to remember that a financial adviser can help with your long-term planning goals and not just transferring your pension. For more information read our getting financial advice guide.
How do I compare pension transfer costs?
To compare pension transfer costs, check any fees and charges from both your current and new provider. This could include things like set-up and exit fees and ongoing charges.
