Should I transfer my pension: three things to think about


Published  25 January 2023
   10 min read

Are you thinking about making a pension transfer from one pension company to another? Read on to learn about the key things to consider when making a decision.

1. Can I transfer my pension?

There might be restrictions on your transfer options so it’s worth finding out from your current provider what type of pension you have. The main types are defined contribution (DC) or defined benefit (DB) pensions.


Defined Contribution Pension Transfer

Your contributions (and any employer contributions or contributions made on your behalf by someone else) are invested to build up your pension savings, and you choose how and when you want to use your savings. The amount in your pension at retirement is based on how much has been paid in and how well the investments have performed.

You can transfer most types of DC pensions but if you have any benefits or features attached to your plan you may lose these if you decide to transfer.

If your DC pension is worth more than £30,000 and has a guarantee about how much you'll be paid when you retire, you must get financial advice before you make a pension transfer. Royal London will not accept transfers from defined contribution plans with guarantees, if you have not received advice.

Defined Benefit (e.g. Final Salary) Pension Transfer

With this type of pension your benefits are calculated using length of employment and salary. DB pensions provide a valuable guaranteed retirement income and often have other special benefits.

If you want to transfer a DB pension to a DC pension you will lose access to your guaranteed benefits from your DB scheme.

If you're thinking of transferring a DB pension to a DC pension and the value of your pension benefits is more than £30,000, you must get advice from a financial adviser. In most circumstances it is not advisable to transfer a Defined Benefit pension to a Defined Contribution pension. Royal London will not accept defined benefit transfers if you have not received advice.

2. Should I transfer my pension?

There are pros and cons to a pension transfer. It’s important to make sure you have all the information you need, and take some time to make a decision that’s right for you. You should read our Pension Transfer Guide before making any decision. Below are just some of the things you should think about before transferring.

There’s no guarantee that transferring or combining your pensions will give a higher income or bigger pension pot when you retire. Your pension is invested so its value can go down as well as up and you could get back less than you put in to your plan.

  • Ease and convenience

    It can be hard to keep track of lots of different pensions. Having your pension savings in one place makes it easier to keep track, and can help you feel in control of planning your retirement.

  • Charges

    Charges can vary depending on the provider, so consider the charges you are currently paying and those you may pay if you transfer to another plan.

  • Investment choice

    If you want access to a wider range of investment options, you should consider this as part of your transfer decision. If investing responsibly is important to you, you should also consider this when making your decision.

  • Flexibility at retirement

    Most DC providers are likely to offer you flexibility at retirement. But it's worth checking so that when you come to retire, you can take your pension savings in a way that suits you.

  • Costs

    You should check to see what costs are involved in transferring, like transfer fees or charges for independent financial advice.

  • Smaller pension pots

    If you have 'small pots' of less than £10,000 it can sometimes be beneficial to keep them separate. For example, it can give some flexibility to take money from them in the future without triggering other restrictions.

  • You might lose valuable benefits

    You might have benefits or guarantees on your existing plan that you may lose if you transfer.

3. Should I speak to a financial adviser?

An adviser can look at your overall finances to help:

  • Understand your needs
  • Discuss potential solutions
  • Draw up a short list of options and providers
  • Highlight the pros and cons
  • Make a recommendation

Advisers may charge for their services – though they should agree any fees with you upfront.