Updated: November 20, 2019

Pension Transfer Charges

How much does it cost to transfer your pension? You can find a complete breakdown of the fees and charges in this article

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: November 20, 2019

If you’re considering transferring your pension to a different provider, you’ll find there’s a lot to consider. Among the more important questions is how much does it cost to transfer my pension to a different provider, and the answer depends on a variety of details, which we cover in this article.

Fortunately, the pensions advisors we work with are experts when it comes to pension transfers and provide you with the right advice to make an informed decision.

Call us on 0808 189 0463 or make an enquiry and we’ll match you with an expert who can talk you through your options.

What charges and fees can I expect when I transfer my pension?

Pension transfer charges and exit fees in the UK are something that can make the difference between a pension transfer being a good – or bad – part of your financial planning.

As with many financial products, the pension transfer charges vary from provider to provider. They can also vary from pension to pension, even if they’re held with the same provider.

However, if you’re planning to transfer your pension, a typical scenario will see a one-off transfer charge. It could be a flat charge or as a percentage of the value you’re transferring to a different provider (depending on your age when you make the pension transfer). For example, if you transfer your £50,000 pension and the provider charges a 10% exit fee, you’ll pay £5,000.

A separate exit fee may also be applied, which was likely detailed in the paperwork when you initially agreed to the pension and reflects the collation of the long-term management and handling charges over the life of the pension.

Sometimes the two fees will be combined and called either a pension transfer charge or a pension transfer exit fee. However, it’s likely you will face costs from charges or a fee of some kind for transferring your pension fund.

The charges and early exit fees involved with pension transfers aren’t always as clear as they initially seem. If you’re unsure about the possible charges you’ll face when you transfer your pension, the advisors we work with can clear things up for you.

Make an enquiry and we’ll match you with an expert shortly.

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How much is the overall cost of transferring a pension?

The overall cost of transferring a pension can be more than any pension transfer charge or exit fee you’ve found in your documentation. It’s worth stating that in some cases, the cost of transferring a pension will be clear and you won’t be surprised when you make the transfer.

However, that’s not always the case and often, pension holders end up facing higher costs than they were expecting when they do make the transfer.

As to putting a figure on the overall cost of a pension transfer, including any charges and fees, it’s pretty much impossible. That’s because different providers have different charges and percentages of your pension pot can also be involved, ensuring there’s no real, typical cost of a pension transfer.

It’s likely though, that when it comes to transferring your pension, the overall cost in many cases could run into the thousands. Of course, where the pension fund or pot you’re transferring is in the hundreds of thousands, a transfer can still make sense, particularly if your new provider can produce higher returns on your investment.

Is there a cap on pension transfer charges for certain schemes?

Yes, following a government consultation on pension transfer charges and early exit fees after holders were granted more pension freedoms, the Financial Conduct Authority (FCA) imposed a 1% cap on early exit fees from pensions, which are typically made through a transfer.

The cap was introduced in 2017 and is effective for personal and workplace pensions, for holders over the age of 55 who wish to transfer their pension to a different provider and/or scheme.

The FCA also ruled that where early pension exit charges were already less than 1%, the provider couldn’t increase it.

Younger pension holders could still face uncapped exit and transfer charges

Although the FCA rules have introduced a cap on the charges relating to a pension transfer, it can only be enforced where the pension holder is 55 or over. For those under that age who wish to transfer their pension, they could face uncapped charges and fees at a percentage of their total pot.

That means any pension transfer costs could total a lot more than someone above the age threshold making the same changes. However, more recently, the FCA has been looking into the pensions market, specifically the complexity and still often high exit fees being charged.

Will I have to pay any exit fees when transferring a pension?

In some cases yes, exit fees are payable when making a pension transfer and in some cases they’re not.

Where there are pension transfer fees the level of the charges depends on:

  • The size of your pension fund
  • Your age
  • Your pension provider

Following the 2016 FCA consultation on pension exit fees, a cap of 1% was introduced. However, as we have detailed, it can only be enforced where a pension transfer or account exit is made by a holder aged 55 or above.

For those aged under 55 planning to transfer their pension, they could face much higher charges. Even where a pension exit charge is below the 1% cap, or your provider has scrapped it completely, you will likely face some kind of charge or exit fee.

The pension transfer charge or exit fee could relate to administration or the costs of handling the transfer. Or, due to the fee structure of a pension, some costs may be outstanding if the pension is transferred early.

Another possibility is that costs relating to the management of the pension funds over the course of each financial year could require paying if the pension transfer occurs anytime other than a March, the final month of the financial year.

But, there are some pension providers who have scrapped pension transfer charges or exit fees, which means any costs that may arise, will likely be on the lower side. In addition, new schemes created after March 31st 2017 were unable to impose any kind of early exit charge.

To ensure you understand all the costs, charges, fees and other implications of transferring your pension, you should speak with a financial advisor.

While it’s a legal requirement to seek professional advice from a regulated financial advisor if the scheme you want to transfer out of is a workplace defined benefit pension scheme worth more than £30,000 it can be very helpful to speak with an expert no matter what size your pension fund is.

Make an enquiry to get started.

Do any pensions providers charge no exit fee?

There are some pension providers who don’t charge an exit charge when you transfer out, or their total exit fees are well below 1% of the total fund. Prudential was among the pension providers to scrap exit charges for pension transfers when the FCA announced its cap.

However, research from various sources suggests that some older pension schemes still charge high fees and holders wishing to transfer their pension could face exit fees of over £10,000 or, where a pension pot is smaller, more than 10% of their total funds.

It’s always important to check the details and charges when you sign up for a new pension or are considering transferring an existing one. It’s important to know, though, that even where there is a pension transfer charge or early exit fee, provided the pension you’re transferring into can perform as well as you expect, you’ll still be better off.

To be sure you’re making the right decision regarding your pension transfer and understand all the charges relating to your decision, make an enquiry. We work with experienced pension transfer advisors and can connect you with the right one for your specific needs.

Speak to a pensions transfer expert today

If you’re interested in finding out more about how much it costs to transfer a pension and are, call us on 0808 189 0463 or make an enquiry and we’ll match you with someone shortly.

Ask a quick question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

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Richard Angliss

Richard Angliss

Finance Expert

About the author

Richard Angliss has made a career in financial services which stretches over 40 years.

His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

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