How much does it cost to transfer a pension?

Through your working life you’ll probably pick up a few pensions along the way. At some point you may want to move them or bring them together, so you have more control over your retirement money – like choosing where it’s invested.

You'll need to think about any possible risks and charges before transferring a pension. We'll break down some of the costs here, to help you decide whether it's right for you.

With a pension the value of investments can fall as well as rise, and you may get back less than invested.

You don’t have to take a leap in the dark with your pension transfer, there are a few steps you can tick off to get the information you’ll need. 

First you should check which kind of pension scheme you're in. 

If you have a defined benefit pension (often called a final salary pension) you're likely to be worse off if you transfer it. You may need to take financial advice before transferring this type of policy, for which the adviser will charge.

The Financial Conduct Authority (FCA) and the Pensions Regulator (TPR) advise that most people should keep their defined benefit pension. If you change your mind about the transfer you may not be able to reverse it. 

With a defined contribution pension (which you may have either through a workplace or personal pension) you generally have more freedom to transfer to a new provider. 

If you want to transfer a workplace pension you’ll need to speak to your employer first as it

may not be possible to move it, or could affect any future pension contributions from them.

Check any pension statements you have, they may have information on charges you're paying at the moment and any costs to move it. If you can't see this information, contact your pension providers and ask for these costs and charges. 

The next step is to review the costs of the pension provider you're planning to move to. They may not charge you to join them, but there will a range of others fees - like admin fees and investment fees - we'll explain these below. You should compare any fees with your current pension, to make sure you're happy with them. 

The government-backed website MoneyHelper is worth visiting if you're planning a pension transfer. It has some useful tools to help you compare pension transfer costs. 

It's also worth taking independent financial advice before you begin a pension transfer. You can find an adviser at unbiased.co.uk - there will be a charge for advice. With some pensions with safeguarded benefits, like a guaranteed annuity rate, you'll have to take advice first.

Here are some of the most common fees when you move a pension. 

Exit fees

Your current provider may charge you a fee to move your pension. This can be either a fixed cost or a percentage of the pension pot. If you’re over 55, this is capped at 1% of the value by the FCA. 

Administration fees

You may be charged for processing the pension transfer. This type of charge could be taken by your old pension provider and the one you're moving to.

Financial advice fees

It's worth taking indepndent financial advice before you begin a pension transfer. You can find an adviser at unbiased.co.uk - there will be a charge for advice. 

With some pensions with safeguarded benefits, like a guaranteed annuity rate, you'll have to take advice first.

Annual management fees

These are regular charges by your new pension provider for managing your pension. You'll be charged an amount each year, either as a fixed fee or a percentage of the value of your pension pot. High management charges can eat into any investment gains, so check how much you'll be paying based on your pension pot.

Other fees

Depending on the investments in your new pension, you’re likely to have other costs as well. Investment funds can have their own annual management and performance fees. It’s wise to check what you’re being charged when you make any choices, as higher investment fees could eat into any gains you make. 

You could also face a range of other fees like initial setup fees by your new provider, so it’s best to check everything before you make the move. 

Transferring a pension in the UK could potentially save you money in a few ways. 

Lower management fees

If your current pension provider charges high ongoing management fees, switching or combining your pensions into one with lower fees can result in significant savings over time. For example, reducing annual management charges from 1% to 0.5% on a £100,000 pension pot can save £500 a year, that’s all money that could grow to help your retirement. 

At Aviva, we offer a lower percentage management fee the bigger your pension pot is, so combining your pensions into our Self-Invested Personal Pension (SIPP) could help reduce your overall charges. 

Better investment performance

Your old pension may be invested poorly or be in lower growth areas like bonds or cash. If your new pension provider offers different investment choices or ones that suit your retirement age better, it could improve the growth of your pension pot.

Although past performance of investments are no guarantee of future results. The value of your new pension may fall as well as rise, and you could get back less than has been invested. 

How to find a cost-effective pension provider

Today, alongside established pension providers like Aviva, there are new arrivals to the market like online platforms and robo-advisers, which use algorithms rather than people to manage your money.

Alongside comparing charges, as we mentioned earlier, you may want to look at customer reviews for potential providers. Do they offer good customer service? Have their charges increased in the past and could they in future? 

If you’re speaking to a financial adviser about your pension transfer you could ask them if they have any personal recommendations based on your circumstances. 

Once you’ve narrowed down your options, you can contact the providers you’re interested in and ask for a detailed breakdown of their fees based on your pension pot. 

How to switch pension providers

Once you’ve decided on a pension provider, the process to move your pension should be fairly simple. Generally, your new provider will manage the transfer for you. When you’ve filled out a form with the details of your pension plan, they’ll contact your old provider and get the ball rolling. 

At Aviva, we have a pension transfer service – you can move any eligible pension to an Aviva Personal Pension or Aviva SIPP (Self-Invested Personal Pension)

Once you’re told your transfer is complete, check that your pension has been invested correctly and that any fees at what you expect. You should also take care of any personal admin, such as ensuring that the name of the individual you want us to consider for any death benefits from your pension is up to date.

Even after the switch it’s good to do a regular review on the performance of your pension, and any charges, to make sure you have the best chance of reaching your retirement goals.