Pension fees

Hidden pension charges — you might not know about.

The platform fee and fund OCF are the main costs, but they're not the only ones. Transaction fees, exit charges, and inactivity penalties can add meaningfully to your total cost — particularly on older or less mainstream policies.

By Pension Bible editorial team·Last reviewed 9 April 2026·5 min read

Transaction and dealing charges

The most common secondary charge is the dealing fee — a flat charge levied each time you buy or sell fund units. Dealing fees are most common on flat-fee SIPP platforms, where the trade-off for a low platform AMC is paying per transaction.

Typical dealing fee ranges in 2025/26:

• Online fund trades: free to £1.50 per trade (most percentage-fee platforms)
• Online share/ETF trades: £3.50–£10 per trade (flat-fee platforms)
• Telephone trades: £15–£30 per trade (most platforms)

For a buy-and-hold investor in a single index tracker who contributes monthly and doesn't rebalance, dealing fees are negligible. For an investor running a self-directed portfolio with regular rebalancing, they can accumulate. A 12-trade-per-year pattern on a platform charging £9.95 per trade costs £119.40/year — meaningful on a smaller pot, less significant on a £200,000+ SIPP.

Some providers also levy a charge for switching between funds within the platform — a "fund switch fee" of £10–£25 per switch. Check the provider's fee schedule before switching fund options, particularly during a transfer in.

Transaction costs within funds are a separate, less visible category. Under the PRIIPs/MiFID II disclosure framework, providers must also disclose "transaction costs" — the bid-ask spreads and market impact costs incurred when the fund buys and sells securities. These are included in the "Total Cost of Investing" figure in the provider's Cost & Charges Disclosure and can add 0.05–0.50% to the headline OCF for actively traded funds.

Exit fees and the FCA cap

Exit fees — charges applied when you transfer your pension out — were historically common on personal pensions sold before 2012. Older policies sometimes charged 5% or more of the pot value to leave, creating a significant barrier to switching even when a better provider was available.

The FCA capped exit fees on personal pension plans opened on or before 31 March 2017 at 1% of the transfer value, effective from 31 March 2017. Plans opened after that date cannot charge any exit fee at all under FCA rules. The AMC regulation page on gov.uk confirms these limits apply to all regulated personal pension providers.

In practice, this means:

• If your policy was opened after April 2017: no exit fee is permitted.
• If your policy was opened before April 2017: an exit fee of up to 1% may be charged. On a £150,000 pot, that's up to £1,500.
• Some insurers have voluntarily waived all exit fees ahead of the regulatory requirement — call and ask.

The 1% cap applies to the exit fee charge specifically. It does not override other policy terms, including guaranteed annuity rates or market value adjustments (MVAs) on with-profits funds. MVAs are a different mechanism entirely — they're reductions to reflect the fund's current market value versus guaranteed projections — and can reduce transfer values by 10–20% in some cases. If your pension includes any with-profits element, check whether an MVA applies before transferring.

Inactivity fees

Some providers charge a fee if no contributions have been made for a defined period — typically 12 or 24 months. These inactivity fees are most common on older contract-based pensions and some group personal pensions associated with previous employers.

The charge is usually expressed as a fixed pound amount per year (£25–£100) rather than a percentage. On a small pot, this can represent a significant drag — a £50/year inactivity fee on a £3,000 pot is 1.67% per year on top of all other charges.

If you have an old workplace pension from a previous employer where contributions have ceased, check the policy terms for any inactivity or "paid-up" policy charge. Consolidating small old pots is often worth doing for this reason alone — our guide to pension fees covers the consolidation decision in more detail.

How to find out what your plan charges

The most reliable way to establish your full cost is to obtain the Cost & Charges Disclosure document. Under MiFID II / FCA rules, every regulated UK pension provider must publish this, and it must include:

1. All product-level charges (platform fee, any contribution charges)
2. All fund-level charges (OCF, transaction costs)
3. The aggregated total cost — expressed as both a percentage and a pound amount

The document is usually downloadable from your provider's website under "Legal", "Key Documents", or "Charges". If you can't find it, your provider is legally required to send it on request.

A second useful document is the Key Features Document (KFD) for your specific policy — particularly for older pensions. This will detail any policy-specific charges that don't appear in the standard tariff, including exit fee terms and any guaranteed benefit conditions.

If you have an old workplace pension with a previous employer's chosen provider and have limited access to online documentation, call the provider directly and ask:

1. What is the current annual management charge on my policy?
2. Are there any exit fees or transfer charges if I move my pension?
3. Does the policy include any guaranteed benefits (guaranteed annuity rates, protected tax-free cash)?
4. Are there any other charges not included in the annual management charge?

Get the answers in writing. A live telephone agent's verbal reassurance is not a reliable record if a dispute arises later.

The pension fee calculator can help you model your total cost once you have all the charge components, and assess whether the compound impact justifies exploring alternatives.

This is factual information, not financial advice. If you're unsure what's right for your situation, speak to an FCA-regulated financial adviser.