Pension fees

How to switch pension providers — without losing money.

Transferring a pension is straightforward in most cases — but old policies can carry guaranteed benefits and protected features that are worth more than the fee saving. Here's what to check before you move.

By Pension Bible editorial team·Last reviewed 9 April 2026·6 min read

TL;DR

▸The transfer process is administratively simple — you apply at the receiving provider and they handle it. Most transfers complete in 2–4 weeks; cash transfers in 5–10 business days.
▸The fee saving from switching an older high-cost pension to a modern low-cost SIPP is typically £500–2,000+ per year on a £100,000–£250,000 pot — compounding significantly over the remaining accumulation period.
▸Guaranteed annuity rates (GARs) on old pensions can be worth 6–8% per year of guaranteed income for life — far above what any modern annuity offers — and are permanently lost on transfer.
▸Protected tax-free cash above 25% (available on some pre-2006 policies) is also permanently lost on transfer. Always confirm in writing before proceeding.

When it makes sense to switch

The compound maths of pension fees makes switching financially attractive in most cases where your total annual cost is above 0.5% on a pot larger than £25,000. On a £100,000 pot, reducing from a 1% total charge to a 0.35% total charge saves roughly £650/year directly — and more in compound foregone growth over time. The pension consolidation calculator will model the specific saving for your pot and time horizon.

The case for switching is strongest when:

You have multiple small pots from previous employers scattered across different providers. Consolidating reduces admin and often reduces total fees.
Your current provider is charging over 0.75% combined and you're over 10 years from retirement.
Your fund choice is limited by the current provider and you want access to lower-cost passive funds.
You've received a statement showing no employer contribution to the current scheme and fees are eroding a dormant pot.

The case for staying (or taking advice first) is covered in the caveats below.

What to check before you transfer

This is the critical step that most transfer guides skip or underemphasise. Before requesting a transfer value or initiating a transfer, get the following confirmed in writing from your current provider:

1. Guaranteed annuity rates (GARs) A guaranteed annuity rate is a contractual right to convert your pension pot into a guaranteed income at a rate set when the policy was opened — often 6%, 8%, or even 10% per year of pot value. Modern annuity rates in 2025/26 are typically 5–7% at age 65 depending on health and terms. A GAR of 8–10% is therefore dramatically more valuable than any modern alternative. GARs are attached to the policy, not the money — transfer the money out and the GAR disappears permanently.

Ask your provider: "Does this policy include a guaranteed annuity rate? If so, what is the rate and under what conditions does it apply?"

2. Protected tax-free cash Most pensions provide 25% tax-free cash on crystallisation (subject to the Lump Sum Allowance of £268,275 from 2024/25 onwards). Some policies opened before April 2006 carry a higher protected entitlement under HMRC's Enhanced Protection or Primary Protection. These higher entitlements are tied to the specific policy and are lost if you transfer.

Ask your provider: "Does this policy have any protected tax-free cash entitlement above 25%? If so, what is the protected amount?"

3. Exit fees The FCA capped exit fees at 1% on policies opened before 31 March 2017 and banned them on policies opened after that date. But 1% on a large pot still represents a meaningful upfront cost — potentially reducing the net financial benefit of transferring, particularly in the short term.

Ask your provider: "What exit fee, if any, applies to a full transfer of this policy?"

4. Employer contribution dependency If you're in an active workplace pension where your employer is currently contributing, transferring out will typically end the employer contribution. Employer contributions are free money — losing them is almost never worth a fee saving. If you want the fee benefits of a different provider, check whether a partial transfer of the historic balance is possible while keeping the active scheme open.

The transfer process step by step

Once you've confirmed no prohibitive guaranteed benefits apply, the transfer itself is straightforward:

Open an account at the receiving provider if you don't already have one. For a SIPP, this takes 10–20 minutes online.
Request a transfer at the receiving provider. Most modern providers have an online transfer request form. You'll need your policy number and basic details of the transferring scheme.
The receiving provider contacts your existing provider. They request a transfer value (the current cash value of your pot) and any necessary discharge documentation.
Your existing provider processes the transfer. Legally, providers have up to six months to complete a transfer, but in practice most complete within 2–6 weeks. Ceding providers are required to acknowledge transfer requests within 2 business days under FCA guidance.
Funds arrive at the new provider. Cash transfers complete in 5–10 business days once the paperwork is processed. "In-specie" transfers (where fund units transfer without being sold) take longer but avoid the brief period out of market.
Reinvest at the new provider. Unless you've specified otherwise, transferred funds typically sit in cash until you confirm your investment choice.

Compare available providers and their fee structures at providers.

What can go wrong

The main risk is not the transfer process itself but the information gathering before it. Things that cause transfers to go wrong:

Incomplete checks on guaranteed benefits. The most costly mistake in pension transfers. A GAR worth £5,000–£15,000 per year in guaranteed income, lost because the policyholder didn't ask the right question, cannot be recovered.

Delays from the ceding provider. Some providers — particularly older insurance companies administering legacy policies — are slow to process transfers. The FCA has put pressure on this, but delays of 8–12 weeks are not uncommon for complex older policies.

Market timing during transfer. Cash transfers require you to sell your existing investments, transfer cash, then reinvest. In a volatile market, this creates a brief period out of market. The risk is usually small relative to the long-term fee saving, but it's not zero.

Pension scams. Unsolicited contact about transferring your pension — by phone, text, or email — is a common fraud vector. Legitimate providers and advisers do not cold-contact you about transfers. Any transfer request must be initiated by you. Report suspicious contact to Action Fraud.

Things to consider

•Check for guaranteed annuity rates (GARs) before transferring — these can be worth tens of thousands of pounds and are lost on transfer.
•Check for protected tax-free cash above 25% — transferring can permanently lose this.
•Exit fees on some older policies can make a transfer uneconomic. Request a transfer value before proceeding.
•This is factual information. A regulated financial adviser can help you assess whether a specific transfer is in your interest.

Key facts

▸The FCA banned exit fees on personal pensions opened after 31 March 2017, and capped exit fees at 1% of transfer value on policies opened on or before that date. [FCA]
▸Pension providers are required under FCA rules to process transfer requests and acknowledge them within 2 business days. Full transfers should complete within the timeframe set out in the FCA's requirements on ceding providers. [FCA]
▸The Lump Sum Allowance for tax-free cash from pension crystallisation is £268,275 for 2024/25 onwards, replacing the previous Lifetime Allowance framework. [HMRC]

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