Transferring your pension isn't right for everyone, but it could be worth considering if you want simpler management, lower costs, access to different investment options or better flexibility.
Before making a decision, it's important to consider both the potential pros and cons of transferring. You should check whether you'll pay any fees, lose valuable benefits or guarantees and whether a transfer is likely to leave you better off overall.
You might have heard different words to describe moving pensions. The terms combining, switching, transferring and consolidating can all be used.
This guide focuses on defined contribution pensions, for more information about transferring defined benefit pensions, where you have a guaranteed income for life, read our guide on defined benefit transfers.
Reasons people transfer their pensions
There are multiple reasons that people want to transfer their pensions, including:
Easier to manage
Having your pension savings in one place makes it easier to manage them. Which can help you feel in more control of your retirement planning, though it’s important to make sure that you don’t lose out from transferring. If you want to actively manage your investments, it also helps to have them in one place.
Potential for lower charges
A lower charge can impact the long-term value of your pension savings. Different providers offer different ongoing charges, often depending on the value of your pension savings.
Lower charges don’t always mean better value. Some pensions with lower charges may offer less investment choice or options for taking your money out of your pension. Our guide on pension transfers charges and fees can help you understand any costs involved.
Access to more suitable investment options
You might gain access to investment options that better suit your goals and preferences by transferring to another provider. For example, you might want access to a broader range of funds or more sustainable options.
Having better investment options doesn’t mean your pension will perform better. Some pensions with more investment choice may also cost more.
Reduce the risk of losing track of pensions
By transferring your pension savings into fewer places, you can make them easier to manage and reduce the risk of losing track of them during your working life. Most people end up with more than one pension, especially if you work for different employers throughout your lifetime. Having your pension savings in one place could make it easier to keep track of them.
More flexibility at retirement
Most modern defined contribution pensions offer flexibility at retirement, meaning different options for taking your pension savings. It’s worth checking so that when you come to retire, you can access your money in a way that suits you.
Reasons you might not transfer your pension
There are also reasons why transferring your pension might not be right for you. You should consider carefully if:
Your pension pot is under £10,000
If you have 'small pots' of less than £10,000 it can sometimes be beneficial to keep them separate, as this can give you flexibility to take money from them in the future without triggering other tax restrictions.
You might lose valuable benefits and guarantees
Some pensions include valuable benefits or guarantees that could be lost if you transfer, including:
- Protected tax-free cash – a benefit that may allow you to take more than the usual 25% of your pension tax-free.
- Access to your pension earlier than age 55 (57 from April 2028).
- Guaranteed annuity rates – a benefit that provides a higher guaranteed retirement income.
Having valuable benefits or guarantees doesn’t always mean transferring is the wrong choice. For example, an older pension may offer limited investment options which have performed poorly. You should consider these factors before making a decision.
You could pay higher fees or charges
Transferring your pension doesn't always mean you'll pay lower charges. In some cases, you could end up paying more. Some of the charges to be aware of are:
- Exit fees – some pension providers charge an exit fee when you transfer your pension, if you’re over 55 this is capped at 1%.
- Charges for switching investments – some providers charge you for changing your investments.
- A higher annual management charge – you might end up paying higher management charges depending which provider you move to.
Learn more about the different charges you could pay in our transfers charges and fees guide.
You already have a pension that suits your needs
It might not be worth transferring if your current pension already meets your needs and offers the features, flexibility and value you're looking for. Your pension may already:
- Have competitive charges.
- Offer suitable investment options.
- Provide the flexibility you need.
You’re currently receiving contributions from your employer
You shouldn’t transfer away from your workplace pension unless your employer agrees to pay their contributions into your new plan, which many won’t as it can cause payroll complexities and extra admin.
You don’t have a plan for your pension
If you transfer without a clear plan in place, you might not choose the investments that are right for you, and you could lose guarantees and benefits that you can’t replace.
Getting financial advice can help you make a plan, understand your options and decide whether transferring is right for you.
What should I check before transferring?
- Benefits and guarantees – will you lose these if you transfer?
- Charges and fees – what will it cost to transfer?
- Investment options – are the right options available to you?
- Retirement flexibility – can you access your money in the way you want?
- Long-term goals – will transferring help you achieve these?
When to speak to a financial adviser about a pension transfer
Transferring a pension can be complex, but a financial adviser can help you decide if it’s right for you. They can help you:
- Understand your current situation and goals for retirement.
- Compare pension providers, charges and investment options.
- Identify any guarantees or benefits you could lose by transferring.
- Explain the risks and potential benefits of a pension transfer.
- Recommend suitable options based on your needs.
- Guide you through the pension transfer process.
If you’re ready to speak to a financial adviser but don’t know where to start, read our getting financial advice guide.
Frequently asked questions
Should I transfer my pension to make it easier to manage?
Having all your pensions in one place can make them easier to keep track of and manage. But it's important to check whether you'll pay any charges, lose valuable benefits or guarantees and whether transferring is likely to leave you better off overall.
Can I transfer any type of pension?
Most defined contribution pensions can be transferred.
Will I lose my benefits and guarantees if I transfer my pension?
You could. Some pensions include valuable benefits, like protected tax-free cash, early access to pensions and guaranteed annuity rates. If you transfer, you could lose these features, and they usually can’t be replaced.
Do I need financial advice to transfer my pension?
For most defined contribution to defined contribution transfers, advice isn't usually needed but may still be helpful.
More on pension transfers
