Pension Transfer Charges | Money Saving Advisors
Understand the fees and charges that may apply when transferring a pension, so you know the true cost.
Know the costs before you commit
Transferring your pension savings might sound straightforward - but the fees involved can quickly add up. From advice fees to exit charges and platform costs, knowing what you'll pay helps you make the right move (or keep things where they are).
Charges when transferring a pension
Transferring is by no means free. Some charges are one-off, while others are ongoing. Here are the most common charges you'll likely come across:
- Advice fees - If your pension is worth more than £30,000 and you're transferring from a defined benefit (final salary) scheme, you're legally required to get regulated financial advice. Fees can range from £1,000 to several thousand pounds, depending on the details of your scheme.
- Exit fees - Some older pensions have penalties for transferring out. These can be a fixed charge or a percentage of your pot, especially if you're below a certain age (like 55).
- Platform charges - If you move your pension to a new provider, check for annual management charges, admin costs, and investment fees. These may look small, but over time, they eat into your returns.
- Fund switch fees - If you change how your money is invested during or after the transfer, some providers charge for switching funds.
These costs can vary hugely from provider to provider, so it pays to shop around and ask for a full breakdown of all charges before moving anything.
Are you getting value for money?
Paying fees doesn't necessarily mean you're making a bad move. Sometimes, the benefits of a new pension - better performance, lower long-term costs, more flexible options - can outweigh the upfront charges. Ask yourself:
- What am I getting in return?
Higher charges might be worth it if they come with better service, investment choice, or long-term growth. - Are the ongoing costs lower?
A transfer might cost more upfront but save you money year after year if the new plan has lower fees. - Will I lose any benefits?
Some pensions come with guaranteed annuity rates, protected tax-free cash, or other benefits. Make sure you're not giving these up unless it's truly worth it. - What does my advisor say?
A regulated financial advisor can help you weigh the costs and the potential benefits, so you can make an informed decision based on your goals - not guesswork.
Summing up
Understanding pension transfer charges is just as important as knowing where your money's going. By getting clear on fees upfront and weighing them against long-term value, you can avoid expensive missteps and move with confidence.
Frequently Asked Questions
Are pension transfer charges always the same?
No - charges can differ widely depending on your pension provider, the type of pension you have, and whether you're transferring to a new scheme with more features. Older pensions might have exit penalties, while new platforms might charge annual fees or fund management costs. There's no "one charge fits all" - so it's important to ask for a full fee breakdown before going ahead.
How can I check if my pension scheme has exit fees?
Ask your current pension provider for a transfer value statement. This shows how much your pension is currently worth and whether any penalties would apply if you moved it. Exit charges are more common in older-style pensions or those with guaranteed benefits. If you're not sure what you're looking at, an advisor can help you check the statement and explain any fees involved.
Can pension charges be deducted from my pot automatically?
Yes, most charges for transferring your pension can be taken directly from your pension pot. This means you won't necessarily have to pay anything out of pocket. But this does reduce the size of your pension, so it's important to understand the impact. Always ask your advisor or provider to explain what will be deducted and when.
What is pension transfer value?
Your pension transfer value is the amount of money you'd get if you transferred (e.g. moved your defined benefit pension into a defined contribution scheme). It's the cash equivalent of the benefits you're giving up. The figure is based on factors like your age, salary, years of service, and current interest rates. You can work out a ballpark figure using our pension transfer calculator.
Are pension transfer fees worth it?
They can be - it depends on what you're getting in return. If a transfer offers better investment options, lower long-term fees, or more flexibility at retirement, the charges might be justified. Paying for financial advice can also help - especially with complex pensions or large amounts. The key is to weigh the short-term costs against the long-term benefits, to make sure the move genuinely suits your goals.
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