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When Should You Consider a Pension Transfer?

Transferring your pension can be a smart way to boost your retirement savings. Whether you’re looking to consolidate multiple pensions, take advantage of better investment options, or gain more control over the way you draw your funds, a pension transfer might be the right move. However, it’s important to understand the potential costs and risks involved. This guide will help you determine when a pension transfer is beneficial, what to consider, and why expert advice is invaluable.

Considering a pension transfer can be beneficial if you’re changing jobs, retiring, or seeking more control over your investments.
Christian Olesen, Financial Planner, Yellowtail

What is a pension transfer?

A pension transfer involves moving funds from one pension scheme to another, to improve investment opportunities, consolidate assets, or gain more flexibility and control over retirement funds. This process involves transferring accrued benefits from an existing pension arrangement, such as a defined benefit (DB) or a defined contribution (DC) scheme, to an alternative pension vehicle, which could be another workplace pension or a self-invested personal pension (SIPP).

When should I transfer my pension?

Changing employment, retiring, or seeking greater investment autonomy could be catalysts for considering a pension transfer. You may opt for pension transfers to consolidate multiple pension pots accumulated from various employments into a single, more manageable fund. Or, if you’re dissatisfied with the investment performance or terms of a current pension scheme you may want to explore transfer options to better align with your financial goals. You might also be looking for more flexibility in the way your pension and potential death benefits are paid.

Reducing fees is also a major driver for the decision to transfer a pension, particularly in older pensions. According to nearly half of pension savers in the UK have charges above 1%. Lower fees mean more savings for retirement. Dennis Hall discusses the impact of fees in a recent episode of our podcast The Century Plan.

Understanding the terms and conditions of both current and prospective pension schemes is crucial. Key factors to consider include exit costs, lost bonuses, and guaranteed annuity rates.

What should I be aware of when I transfer my pension?

Understanding the terms and conditions of both current and prospective pension schemes is crucial. Key factors to consider include:

Exit costs

Exit costs can significantly impact the value of your pension transfer. These fees, imposed by your current provider, can include administration charges, early termination fees, and market value adjustments, potentially reducing your pension pot considerably.

Lost bonuses

Transferring your pension may result in the loss of accrued bonuses. Many older pension schemes offer bonuses for loyalty or performance, which you might forfeit upon transferring, diminishing the overall value of your pension.

Guaranteed Annuity Rates

Guaranteed annuity rates (GARs) offer a fixed income upon retirement, often higher than current market rates. Transferring a pension with a GAR can mean losing this benefit, leading to a lower retirement income.


During the transfer process, your pension may be in cash and out of the market for several weeks. The timing of a pension transfer can affect its value due to market fluctuations. Transferring during a market downturn can lock in losses, while transferring during a peak can maximize gains. Transferring “in-specie” (keeping funds invested during the transfer) can mitigate this risk, though it might incur additional costs.

Added risk

Transferring your pension may introduce added risk, particularly if moving to a scheme with different investment strategy, or from a defined benefit to a defined contribution pension. It’s important to ensure your pension in invested in a way that aligns with your retirement goals.


Many workplace pensions have very low charges, so you should consider whether a transfer is necessary to meet your goals, or if there is an alternative in your current scheme. In some cases, switching to a more appropriate fund within your existing pension may be more suitable, especially if you are not yet drawing on the pension.

Should I take advice when I’m thinking of transferring my pension?

Financial experts have the knowledge, experience, and analytical tools necessary to assess your financial circumstances, risk tolerance, and long-term objectives. They can provide personalised recommendations, evaluate the suitability of pension transfer options, and help you make informed decisions aligned with your financial goals.

It’s important to note, if you’re looking to transfer a defined benefit pension with a value of over £30,000, you will be required to take advice from a pension transfer specialist.

What costs are involved in pension transfers?

Costs and charges depend on the nature of the transfer, the pension provider, and the specific terms of the schemes involved. Pension transfer costs include administrative fees, investment management charges, exit fees from the existing pension scheme, and professional advisory fees for those requiring financial advice. You should carefully review and compare fee structures to assess the overall cost-effectiveness of potential transfers


Your pension is a significant investment; often one of your most valuable assets, alongside your home. Without prior knowledge and experience of the pensions and investments landscape, the complexities, legalities and potential risks involved in the decision-making can feel daunting. A financial planner can guide you through the process and help you to make the most of your pensions, keeping them secure and ensuring they’re structured in a way that meets your goals.

It’s important to note, if you’re looking to transfer a defined benefit pension with a value of over £30,000, you will be required to take advice from a pension transfer specialist.


Founded by Dennis Hall, Yellowtail are the trusted financial planners who advise affluent individuals & families in the South West and across the UK. Yellowtail’s experts provide the clarity, control and confidence to guide you through financial planning, estate planning, pension transfers and investment management directing your journey towards a prosperous retirement and financial peace of mind.