Is transfering my UK pension a good idea?

‘Transferring’ your pension means moving it from one location to another. If you’ve built up a pot of money in a defined contribution pension, you can usually transfer it to another pension provider. This could be a workplace pension from a new job or a personal pension you’ve put up on your own, such as a self-invested personal pension (SIPP).

Before you start drawing money from a defined contribution pension, you can usually relocate it at any moment. Check with your provider to see if there are any limitations in your circumstance.

You can often transfer even after you’ve begun receiving payments from your pension. However, if you think you might want to transfer money later, it’s a good idea to double-check this before you start taking money.

Is Transferring my Pension a Good idea?

It’s a crucial subject to consider, and you should determine whether you’ll be better or worse off after transferring.

Whether or not a transfer is appropriate will be determined by your unique circumstances and goals. This material can’t possibly cover everything you’ll need to consider, but it can get you started.

Before you transfer, there are a few questions you should ask yourself.

Is the New Pension Going To be More Expensive Than My Old One?

Before transferring your pension from one location to another, be sure you know what the charges are for each. Not all pensions have the same fee structure. As a result, you’ll want to double-check the fees levied by the pension plans you’re considering switching from. The following are some of the most important charges to look out for:

  • Any fees associated with the first set-up
  • Annual management fees for the investments you’re considering
  • Platform costs, often known as service/administration fees
  • Charges for certain transactions, such as withdrawing funds from a pension
  • Trading commissions are fees imposed for purchasing and selling specific investments.

Is It a Smart Idea to Combine All of My Pension Pots?


This question has no right or incorrect answer; it all depends on why you want to do it.

Some people simply enjoy having all of their pension funds in one place to make keeping track of them easier.

Costs, on the other hand, are critical. To keep things simple, think twice before switching from a low-charging plan to a higher-charging strategy.

However, if you are nearing retirement and your current plan does not provide the retirement income alternative you desire, consolidating all of your pension funds into a single plan with the flexibility you require may be a good idea.

If you have a tiny pension pot worth less than £10,000, it’s probably best to leave it alone. This is because, if you’re thinking about taking a lump sum before retiring, taking the pension as a small pot lump sum and removing the entire amount will have no impact on future pension contributions.

You may wish to preserve smaller pensions if you’ve built up a big value in pensions or believe you will in the future. This is due to the ‘small pot lump sum’ restrictions, which allow you to withdraw small pots (less than £10,000) without eating up your lifetime allowance of £1,073,100. (current for this tax year).

Will I Be Deprived of Any Important Pension Benefits?

Pension piggy bank

If you are considering a pension transfer from the UK, this is a very important point to consider. It’s likely that your present pension provides you with valuable benefits that you’d forfeit if you transferred out. Additional death benefits, a larger tax-free lump amount, or a guaranteed annuity rate option are just a few examples.

The pension provider will give you a guaranteed lifetime income (commonly known as an annuity) at a set rate if you choose the guaranteed annuity rate option. When you retire, this is frequently higher than the rates available in the general annuity market.

As a result, it’s critical to consider if you’re willing to give up this choice, as well as any other program benefits.

If the value of any fixed annuity rate or certain other important benefits exceeds £30,000, you may be required to seek regulated financial advice before moving the pension to another scheme.

This guideline is in place to safeguard you and ensure that giving up these benefits is in your best interests.

Everyone is unique. That’s why, unless you’re certain you understand the implications of transferring, you should speak with one of our free pension experts. They can help you understand what to think about and what steps you’ll need to do to transfer.

Is There a Fee for Moving My Pension?

When you transfer out of some schemes, you may be charged fees, including an exit fee. You should also consider any set-up and recurring fees associated with the new pension program you intend to join.

If your scheme has an early exit charge, it can’t be more than 1% if you seek to transfer out after the age of 55 but before the scheme’s regular retirement age.

If you’re over the age of 55 and join a new personal pension after March 2017, or a trust-based workplace pension after October of the same year, the scheme can’t charge you for shifting your pension.

Before moving your pension, double-check with your existing provider to see what fees you might incur.

If I Transfer My Pension, What Investing Options Do I Have?

Pensions provide a wide range of investment alternatives. Some have a limited number of investing alternatives, while others have several. Some may also provide more specialized investing possibilities, such as the ability to invest directly in stocks or real estate.

Consider whether you require more investing options or if you require assistance in making financial decisions.

Having a large number of investment options can be beneficial, but it can also increase the cost of the product and make it more difficult to make those decisions.

If you have a workplace or stakeholder pension, it must offer one or more investment funds in which your money will be invested if you are unable to make your own decision.

If you’re wanting to start a new pension, see if they have any pre-made solutions or can help you limit down your selections.

See our guide to choosing the right accountant for a startup as well.

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