Drewberry™ provide pensions, investment and insurance advice for Money to the Masses readers throughout the UK.

Is it a good idea to transfer my pensions?

Should I Transfer My Pensions?

Someone with a pension fund usually has the option to transfer their pension in a number of different ways.

You may be able to transfer your pension to another:

However, there are some pensions you can’t transfer and others where a transfer may not necessarily be beneficial given your needs and circumstances. That’s why it’s important to take pension transfer advice before proceeding.

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What is a Pension Transfer?

A pension transfer involves moving assets from one pension fund to another. How a pension transfer works depends largely on the type of pension you’re transferring.

Defined contribution pension transfer

A defined contribution or money purchase pension is essentially an investment fund with your name on it. This often makes it fairly simple to move from one pension provider, platform or employer/workplace pension scheme to another one should it be appropriate for you to do so.

Within the category of defined contribution pension transfer you may find yourself undertaking a pension switch or a pension transfer.

A pension switch involves moving benefits from one money purchase personal pension to another. This is a fairly simple process, especially with two stakeholder pensions, as stakeholder pensions are bound by law to accept transfers in.

A defined contribution pension transfer, on the other hand, is typically better understood as a transfer between a money purchase occupational pension scheme, perhaps from an old employer, to a personal pension arrangement.

Defined benefit pension transfer

A defined benefit or final salary pension is usually more complicated to transfer, both in terms of the analysis and considerations you’ll need to undertake and the process itself.

You’ll need regulated advice if your pension is worth more than £30,000. This is because there’s no individual ‘pot’ with your name on it – instead, you’re building up a promise from the scheme to pay you an income when you retire.

The transfer value from a defined benefit pension is known as a cash equivalent transfer value (CETV) because it’s the equivalent cash amount you’d need to buy the same income your company would have previously paid you under the scheme.

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Why transfer your pensions?

Why Transfer a Pension?

You might transfer your pensions because…

  • You want to consolidate multiple pensions into bigger pots
  • You’ve changed jobs
  • You’re looking to pay less in fees and charges
  • You want access to a wider range of funds
  • Your pension scheme is being closed.

Pension Consolidation

One of the biggest reasons people transfer their retirement savings is because they’re looking to consolidate their pension holdings.The average person has 9 jobs in their lifetime so – especially with the introduction of auto-enrolment – it’s now very easy to build up multiple pension pots if you have multiple jobs over your career.

consolidating your pensions can reduce costs

Consolidating your pensions might be done as part of a pension review. It involves reducing the number of pension funds you have into fewer, or even a single, holding.

This may have a number of potential benefits:

  • Single larger pot can reduce fees and charges
  • Clear oversight of retirement savings
  • Easier to manage your investment risk and tax planning

Having consolidated your pension pots it is much easier to manage your investment risk, review your pension holdings and better engage with pension tax planning with more oversight of your savings.

Mark Williams Wealth & Investments Expert at Drewberry

While it often makes sense to consolidate pensions into fewer pots, you need to think carefully before you do so to make sure it’s the best financial decision for you. Beware of any exit charges that may shift the balance between whether pension consolidation is a good idea or not.

Mark Williams
Wealth & Investments Expert at Drewberry

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Moving workplace pensions

Time to consider transferring your pensions


Merging Workplace Pensions When You Change Jobs

With an occupational or workplace defined contribution pension, although the investment pot is under your name it’s tied to your employer. If you leave you may be able to transfer your pension, either to a personal pension arrangement or to your new employer’s pension scheme. However, your new employer isn’t obliged to allow a transfer in from your old scheme.

There may also be exit fee, charges and other costs imposed by trying to move your pension from previous jobs, so it might not be financially worth it to do so.

If you don’t transfer your pension from an old job, it doesn’t vanish. Even if you don’t pay into it any more, it stays invested and you’ll be able to access it when you reach the scheme’s pension age. You may, however, still want to compare old pensions with new ones to see if you can reduce ongoing fees and charges.

Casey Goodwin
Wealth & Pensions Administrator at Drewberry


Moving Pensions for Access to More Funds

If you’re a keen investor and want access to more funds than your pension currently offers, it may make sense to move your pension elsewhere. Typically, if you have a personal pension arrangement, a self-invested personal pension (SIPP) will offer the most freedom in terms of the areas and funds you can invest in.

However, SIPPs typically have higher ongoing fees and charges than other pension arrangements. This is particularly the case when compared to a stakeholder pension, where the government has a strict cap on the fees such platforms can charge. Also, there’ll typically be charges associated with the transfer, such as exit charges on the old plan, initial charges on the new plan and the cost of any advice you take on the transfer.

It’s important to take these charges into account, along with other factors, such as your current investment objectives, before considering moving your pension and potentially paying these higher charges.



Transferring Your Pension if Your Scheme Closes

Defined benefit pension schemes can close, either to new members or entirely. This is usually as a result of funding difficulties. If your company has gone into administration and the scheme has transferred to the Pension Protection Fund, then you won’t be able to transfer out. If, however, the scheme has simply closed then it may be possible to make a transfer.

ask jonathan cooper, senior paraplanner at drewberry, for pension transfer advice

Pension funds in financial difficulties may offer an enhanced transfer value for you to leave the scheme as an incentive, as you transferring out reduces the scheme’s long-term liabilities. However, as with all defined benefit pension transfers, you’ll have to carefully consider your options to decide whether it’s right for you, even with an enhanced offer on the table.

Jonathan Cooper
Senior Paraplanner at Drewberry

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Which Pensions Can You Transfer?


Most defined contribution or money purchase schemes

If you have a defined contribution pension worth more than £30,000 and it has a guaranteed annuity rate, you’ll need to seek pension advice before transferring.


Most private sector defined benefit pension schemes

If your final salary pension is worth more than £30,000, you’ll need to receive regulated financial advice before transferring. It’s also important to consider very carefully whether this is in your best interest, as a defined benefit pension transfer isn’t right for everyone.


You can transfer out of funded public sector final salary schemes, such as the local government pension scheme. 

However, again it’s important to make sure this is the right decision for you before transferring.


You can’t transfer out of unfunded public sector schemes, such as the teachers’ pension fund, the NHS or the armed forces pension.

Unless you’re transferring from a private sector to a public sector scheme, it’s increasingly uncommon for final salary schemes to allow new members to transfer funds in.

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defined benefit pension transfer

Final Salary Pension Transfer

With a final salary pension, there’s no pot of cash with your name on it. That means any potential transfer value you receive from a defined benefit scheme is meant to be equivalent to the sum of money you’d need to buy the same income you’d get from your company on the open market, assuming the funds are invested until the scheme’s normal retirement date.

Many companies are offering high pension transfer values in the current environment thanks to funding pressures. This is designed as an incentive to transfer. Another reason for today’s high transfer values is the difficulties with replicating a pension income with an annuity in a low-rate economic climate.


Why Transfer My Final Salary Pension?

  • Take advantage of the new pension freedoms
    Access your defined contribution pension from 55 compared to having to wait until you’re scheme’s normal retirement age to take a final salary scheme.
  • Use the flexibility of income drawdown to take income and lump sums as and when you need them
    This is compared to the regular, unchangeable payments you’d receive from a final salary scheme.
  • Pass your new drawdown pension pot to loved ones
    Aside from a reduced widow’s pension, there’s not usually anything left behind when the original pensioner dies, whereas with a defined contribution scheme there are favourable inheritance tax rules for passing down pensions.
  • You’re in poor health
    If your life expectancy is short, you won’t receive income from your final salary scheme for very long despite potentially having paid into it for years. With a transfer, you’ll receive a lump sum you can pass down to loved ones if you wish.
  • Manage your own investments
    Invest how you want and in a portfolio designed specifically to meet your retirement needs.
  • Avoid doubts about the health of your employer
    Final salary schemes have been at the heart of some of the most noteworthy corporate administrations in the UK in recent years, including the pension scheme ‘black hole’ which contributed to the demise of retailer BHS. If your employer collapses, your scheme will likely end up in the hands of the Pension Protection Fund.

Risks of a Final Salary Pension Transfer

The biggest risk of leaving your defined benefit pension is that you’re giving up a guaranteed income for the rest of your life. If you choose to leave your final salary pension for drawdown, your retirement income is no longer guaranteed and could therefore run out sooner than you hoped. The risk here is that you’ll find yourself worse off in retirement than if you’d stayed within the scheme.

Other risks involved include:

  • You’ll need to take on all the investment risk yourself
  • The value of your pension fund could go down as well as up in line with market performance
  • You’ll lose any rights you had under your scheme, such as the widow’s pension
  • No opportunity to change your mind
  • Increased fees and charges.

Use the Final Salary Pension Transfer Calculator below to estimate what your transfer value might be.

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Final Salary Pension Transfer Calculator

Find out how much your final salary pension might be worth in today's money if you considered accepting a cash equivalent transfer value from your scheme.
This calculator is an excellent first step when deciding whether to transfer away from a final salary pension scheme.
Damien Fahy
Have you received a pension transfer value?
What is the transfer value the pension scheme has offered? This is often called a cash equivalent transfer value and is the lump sum the pension scheme is willing to pay you to transfer out of the final salary scheme.
Input the details from your last pension statement below and find out what we would anticipate to be a good cash equivalent transfer value.
Year of Pension Valuation This is the year your annual pension income was last calculated for, we need this date so we can multiply the value of your pension income up to today's value.
Annual Pension Income This is the annual income you can expect to receive from your pension.
At what age are you due your pension? This is the age at which you expect to start receiving your pension.
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How good is your Final Salary transfer value?

Using our expertise we have modelled your results below so you can see what your final salary is likely to be worth as a single lump sum if you were to consider transferring out of the pension arrangement. Based on our experience and understanding of the transfers offered by various schemes we have created bandings based on what we would deem to be good value.

If you are considering what to do with your final salary pension it is very important to speak to an expert pension adviser. Please do not hesitate to call us on 02084327334.

Introduction to Financial Planning [VIDEO]

Fair value is based on the average transfer value from Xafinity Transfer Value Index for a £10,000 annual income for a 64 year old retiring at 65. (Nov 2017)
For individuals who are younger than 64 years old a 3% real investment return is taken into account when discounting the cash equivalent transfer value for their current age.
Neil Adams - Final Salary Pension Expert

These calculators help but sometimes it doesn't beat talking to a human. If you need any support please do not hesitate to pop us a call on 02084327334.

Neil Adams
Head of Pensions Advice at Drewberry


This calculation and additional information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 02084327334 should you require financial advice.

A transfer out of a final salary scheme is irreversible and can only be done after advice has been given by a qualified financial adviser.

The transfer value bandings we calculate should only be treated as guidance, your personal circumstances and other wealth must be taken into account to understand whether your pension transfer is good value given your specific situation. For more information on the assumptions made in this calculator please click here.

Defined contribution pension transfer

Defined Contribution Pension Transfers

The considerations and analysis involved with transferring a defined contribution pension are typically much simpler than for a defined benefit pension transfer because they’re essentially an investment fund with your name on it. You can transfer of switch these as you see fit throughout your working life.

If you want to transfer your money purchase pension, you need to ask your provider for a transfer value. A defined contribution transfer value is usually simply the amount of cash you have in the pension, less any exit fees and charges you may have to pay for moving your pension.

You may be able to transfer your pension to another workplace scheme or to another pension provider or platform. This could be to consolidate your pension holdings or achieve lower fees and charges. You might also transfer a defined contribution pension because you’re looking to access more funds.

Jonathan Cooper
Senior Paraplanner at Drewberry


Risks of Transferring a Defined Contribution Pension

  • You might have to pay an exit charge when you make the transfer
  • Your new pension might charge higher fees than your last one
  • You might lose the right to take more than 25% of your pension upfront as a tax-free cash lump sum (available to certain pensions which fall under pre-2006 rules)
  • You might lose guarantees such as a guaranteed annuity rate, guaranteed maturity value, guaranteed investment returns etc.
  • You might lose the right to take a pension at an age younger than 55
  • If you have any benefits associated with your pension, such as Life Insurance, you may lose this
  • There’s very little opportunity to change your mind.

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A simple policy well explained good impartial advice and knowledge done with a smile! Many thanks.

Martin Johnson
avoid pension transfer scams

Make Sure You Avoid Pension Transfer Scams

Since the introduction of the pension freedoms, there’s been a higher incidence of pension transfer fraud as criminals use awareness of the new legislation to effectively con people out of their hard-earned savings.

A pension scam often starts with an unsolicited text message or cold call, offering you the chance to transfer, unlock or access your pension. It may even promise you can do so free of tax. If you receive any such communication from a company you’ve never heard of or have never had any dealings with, the best thing to do is to ignore it.

how to avoid pension scams

You can contact the Pensions Advisory Service if you’re being harassed by pension cold callers pressuring you into transferring your pension.

Scams come in many forms, but phrases such as ‘pension liberation’, ‘pension loan’, ‘loophole’, ‘tax-free’ or ‘time-limited’ should set of warning bells, especially from a company you don’t know anything about.

To protect yourself from pension scams, steps you can take include:

  • Checking the firm’s contact details, such as telephone number and address, and see if these seem genuine
  • You can also check these details on the Financial Services Register, a database of regulated and approved financial services practitioners held by the FCA
  • Make sure you can call the company back later at a time that suits you
  • Know that you can’t unlock your pension before the age of 55 (unless you’re terminally ill), and doing so will incur a hefty tax charge
  • Don’t be rushed into making decisions
  • Be extra cautious about ‘overseas’, ‘ethical’ or ‘new opportunity’ investments
  • And, above all, if it sounds too good to be true it probably is.

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get pension transfer advice from the experts

Expert Pension Transfer Advice

neil adams, pensions & investments expert at Drewberry, can offer pension transfer advice

For advice on transferring your pensions, whether you’re looking to merge some stranded defined contribution pension pots or leave a defined benefit scheme, the team at Drewberry is on hand to help.

Our experts have helped many clients with pension transfers using the skills and knowledge they have at hand. To get in touch, don’t hesitate to pop us a call on 02084327333.

Neil Adams
Pensions & Investments Expert at Drewberry

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The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested. Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people. Tax treatment varies according to individual circumstances and is subject to change.