Pension transfer: Everything you need to know on how to transfer pensions

What is a pension transfer?

A pension transfer is a process where you move pension savings from one provider to another, perhaps to consolidate several pensions or because you’ve changed jobs and are moving to your new employer’s scheme. 

It’s also possible you might simply decide to transfer your pension because you're unhappy with your current pension, or you’re emigrating and need to find an overseas provider. 

When should you consider transferring a pension?

Transferring a pension can incur fees and charges, and in some cases you may also lose benefits, so it’s important to understand all the implications before you take this step. 

Some of the reasons you might decide to proceed with transferring your pension include:

• Having multiple pension pots
• Being unhappy with the current pension provider
• Wanting more investment options
• Moving abroad

You have multiple pension pots

If you’ve worked multiple jobs for multiple employers, you may want to combine your pensions to simplify your retirement finances by giving yourself one pot to manage, track and stay on top of. 

You're unhappy with your current pension provider

You may simply decide to transfer your pension because you’re dissatisfied with your current provider, whether that’s due to poor performance, high fees or bad customer service. Or you may just like the look of the service, benefits, tools, apps and support offered elsewhere.  

You want more investment options

You might decide that you want to change the type of pension you’re in, and products such as SIPPs offer flexibility, choice and range that standard personal pensions may not. 

Similarly, if your financial situation changes it could make sense to move to a Stakeholder Pension, which offers simpler rules and lower limits on contributions.

You are moving abroad

If you’re moving abroad you may want or need to take your pension fund with you, and if you move it into a 'qualifying recognised overseas pension scheme' (QROPS) then that process could be much smoother with less or even no tax to pay. 

By contrast, overseas transfers to non-QROPS pension schemes may incur tax of 40% or more, and that’s if your UK provider even lets you do it. 

And even moving to some QROPS schemes may incur 25% tax, depending on the location you’re moving the pension to, and it’s also important to note that the Overseas Transfer Allowance sets an upper limit (£1,073,100) on what you can transfer before tax kicks in.  

What types of pensions can be transferred?

In theory any pension type can be transferred to another authorised provider, but the considerations and rules depend on your current scheme and what you’re looking for elsewhere.  

Can you transfer Workplace Pensions?

When moving jobs it’s very common to switch pension schemes at the same time, and in most cases your new employer will take care of this for you. 

Defined Contribution:  It’s usually quite straightforward to transfer funds from one workplace Defined Contribution (DC) scheme to another DC one. 

Defined Benefit: It’s often possible to liquidate a Defined Benefit (DB) scheme and invest those funds into a Defined Contribution scheme, but it’s rarely recommended. Defined Benefit schemes, also known as final salary pension schemes, offer a guaranteed income for life based on your final salary and years of service, whereas DC schemes expose you to market risks and fluctuations, so you’re likely to have a lot to lose if you transfer from a DB to a DC pension. 

In fact, that is such a major decision (and one that can often have a negative impact on your retirement savings) that you’ll be legally obliged to consult with a financial adviser before doing this if your Defined Benefit pension is worth £30,000 or more. 

Can you transfer a Personal Pension?

Transferring a personal pension, such as a SIPP or a Stakeholder Pension, to another provider shouldn’t cause any problems, and most likely your new provider will guide you through the process.  

Can you transfer a frozen pension?

If you previously started one or more workplace pensions but subsequently stopped contributing, perhaps because you moved jobs, then those old pensions are said to be frozen. 

It’s nice to think that frozen pots do nothing but grow over time, but there are a number of factors that could prevent a frozen pension from growing as much as it should, including: 

• Management fees
• Investment fees
• Platform fees
• Inactivity fees

You should be able to transfer frozen pension funds into your current workplace pension or a personal pension, but always consider the exit fees associated with each transfer before you proceed.

What are the benefits of transferring your pension?

If you consolidate multiple pensions into one single pension pot the main benefits are likely to be the efficiency and simplicity of having:

• One pension provider to deal with
• One statement
• One single set of charges
• One unified view of a single pension and its performance. 

Also, thanks to compounding, one big pot might grow bigger and faster than several smaller pots. 

If you’re seeking a better pension experience, whether it’s about performance, customer support or something else, then the key is to do your homework and transfer to a provider that has the right credentials. 

As you near retirement you may have different priorities and want to move to a provider that offers more flexibility or certain tools and functions, to help you manage withdrawals. Again, if you do your research and pick a provider that is proven in the right areas then you should be able to find a scheme that works for you. 

What are the risks and downsides of transferring pensions?

Transferring pensions can come with downsides, such as loss of guaranteed benefits, transfer fees, and additional risks. Some of those may be serious and significant enough to push you towards professional advice. 

Loss of guaranteed benefits

Transferring out of a Defined Benefit scheme (DB) and into a Defined Contribution (DC) one is rarely a good idea because you’re essentially throwing away a guaranteed retirement income for an income that is less certain. 

DB pensions, also known as final salary pensions, pay a guaranteed income that rises with inflation and typically offer significant death benefits for your family too. There’s a security in DB pensions that few DC schemes can match.

Some older DC schemes may have some guarantees that would be lost on transfer so it’s important to check prior to moving your pension.

Transfer fees and charges

In most cases you can now transfer out of a pension without incurring fees and charges, unless you engage a financial adviser as part of the process. 

The majority of fees and charges come once your pension is live, and it may take time and / or digging before you’re fully clear on all of the costs involved.

Investment risks

If you have a Defined Benefit (final salary) pension then your retirement income is guaranteed; it’ll rise with inflation, has legal protections and likely attractive perks and benefits. Although Defined Contribution pensions can also be very attractive, their performance will rise and fall with the market and so nothing is guaranteed.  

Should you transfer a Defined Benefit (DB) pension?

Transferring out of a Defined Benefit (DB) pension is a significant decision so it is strongly suggested that you seek professional advice before acting. In fact, if your DB pension transfer value is £30,000 or more then you won’t be allowed to transfer out of it until you consult an FCA-authorised adviser about that decision.

DB pensions offer a guaranteed income that rises with inflation plus often quite generous benefits, so you may be advised to open a Defined Contribution scheme as well as, not instead of, your DB scheme.

Still, in a few rare cases it might make sense to transfer out of a DB scheme; for example:

• You may be worried about your employer’s stability (note that the Pension Protection Fund, set up in 2005 by the Pensions Act 2024, offer protection for members of eligible DB pension schemes if employers go under.)
• Your employer may offer you a generous financial incentive to exit
• You might have a strong ethical urge to pick and/or manage your own investments
• You could suffer serious ill health and seek an early or lump-sum payout
• You may have a solid retirement income beyond your DB pension so the guarantees might matter less.

Do note, however, that once you transfer out of a DB pension this cannot be reversed and there’s very little prospect of finding another one. DB schemes are a lot less common now than they were a generation or two ago.

Can you transfer your pension yourself or do you need advice?

Seeking financial advice is a legal requirement if you want to transfer out of a Defined Benefit (DB) pension valued at more than £30,000, but below that you’re mostly free to action a transfer without advice. 

In most other cases financial advice isn’t mandatory, but it can still be very beneficial to engage a qualified and knowledgeable adviser that can help you navigate your options and direct you to schemes and providers that suit your needs and circumstances. A good adviser may even help you to save money and keep your costs down. 

To choose a regulated financial adviser:

• First check that they’re listed on the FCA’s Financial Services Register
• Check that they’re specifically authorised to advise on pension matters
• You can also check independent review and comparison platforms
• It might be worth asking for word-of-mouth recommendations from peers, friends and family too.

What are the tax implications on pension transfers?

UK-to-UK pension transfers are generally tax-free (of course, that doesn’t mean they’re always fee-free) but if you withdrew funds or benefits before April 6, 2024, then your Lump Sum Allowance will reduce by 25% of any Lifetime Allowance used. The same rules apply for your Lump Sum and Death Benefit Allowance (LSDBA). 

The Lifetime Allowance (LTA) was discontinued in April 2024 but pension activity before then is still subject to some of its rules.

Transferring a UK pension to a recognised (QROPS) scheme should avoid major tax penalties of 40% or more, but that doesn’t mean there won’t be some tax and / or charges to pay. Whether you’ll pay tax / fees – and how much – depends on several variables including where you’re going, how much you have saved, how long your pension has been in place and where you’ve previously been based.

For more specific and relevant info it’s best you consult your pension provider.

You can learn more about pension tax in the UK in our guide: Pension and tax: Everything you need to know

Pension transfers by age group

Transferring pensions in your 30s and 40s

In your 30s and 40s it may be worth hunting down and consolidating old workplace pensions so there's one big pot, in place of several smaller ones, ready to grow for the long term. 

Transferring pensions in your 50s

As you near retirement make sure you weigh up fees, as well as any other pros and cons of transferring or consolidation, in order to understand whether it’s worth it at this stage. You may want to engage professional help to avoid costly mistakes, especially if you're already drawing down on your pot.

Transferring pensions in your 60s and beyond

While it’s possible to transfer an active (or so-called crystallised) pension, you may be restricted on how much you can move, and where you can move it to. 

Transferring crystallised pensions is often an all-or-nothing thing, so you may not be able to move only a part of it. 

If you wish to transfer your crystallised UK pension to an overseas provider then the Overseas Transfer Allowance (£1,073,100) will apply and transferring via QROPS will ensure you avoid both delays and significant charges. 

How to transfer your pension: Step-by-step

• Find all your pensions: note down all the details and get valuations for each.
• Enquire about exit fees: For each pension inquire about exit fees and the benefits you’ll lose if you transfer.
• Seek advice: You can contact an FCA-authorised adviser if you feel less confident (in some cases you may be legally required to do this). Your adviser can lay out all the pros, cons and relevant info, helping you to compare options and find the right fit for your needs.
• Decide on a new pension provider: Make a decision on where you'll transfer your pension and consult that provider. 
• Apply to transfer: Apply to transfer via your new provider. You may need to fill out some paperwork but they should otherwise handle all of the transfers on your behalf. 

You can learn miore about finding your lost pensions in our guide: How to find your pensions: tracing lost or forgotten pots

Pension transfers frequently asked question

How long does a pension transfer take​?

A pension transfer can take anything from about 10 days to three months – it depends on the complexity of your policy and what rules (and resources) your providers have in place. 

Domestic transfers generally take less time than overseas ones, electronic goes faster than paper, and extra due diligence checks will likely cause extra delays. 

Can a pension transfer be refused?

Pension transfers can be refused for various reasons, for example if one provider is concerned about the legitimacy of the other, or if there’s evidence of fraud. Receiving companies are obliged to conduct due diligence checks, which could trigger an ‘amber’ or a ‘red’ flag that might block proceedings until further notice. 

Financial advisers can also refuse to recommend a transfer if, for example, they determine that the transfer wouldn’t be in your best interests. 

Can you transfer a workplace pension to a private pension​?

You can generally transfer old, frozen or non-active Defined Contribution (DC) workplace pensions into a private pension smoothly, but restrictions and complications may prevent you from transferring an active DC workplace pension in the same way. 

It is much less straightforward, and often not recommended, to transfer out of a Defined Benefit workplace pension. 

Can I transfer my pension into a SIPP?

You can transfer funds from most Defined Contribution pension types, such as Stakeholder Pensions, workplace pensions and so on, into a Self-Invested Personal Pension (SIPP) without much issue, but it’s much less straightforward to do the same with a Defined Benefit pension.

Be aware that SIPPs often come with higher fees and require more skill and knowledge to run, because you pick and manage your investments yourself. 

Is it safe to transfer pensions online?

Online transfers are often the preferred means of transferring pensions for most providers now, because of its efficiencies and, especially if you’re dealing with reputable providers, because the process has in-built security measures to flag issues, problems and threats throughout. 

Can I transfer a pension if I’ve already started drawing from it?

Transferring an active or crystallised pension is possible but you may be restricted in how much of your fund you can move, where you can move it to, and what product(s) you can move it into. There may also be additional fees. 

Do I need a financial adviser to transfer my pension?

Technically you only need a financial adviser when transferring a Defined Benefit pension valued at £30,000 or more, but having a professional weigh in is never a bad idea. An FCA-registered adviser can help you to line up your options, get a handle on fees, and understand which product(s), and which course of action, best fits your needs.