Your pension transfer options

What is a pension transfer?

A pension transfer involves moving a pension from one provider to another. 

The majority of pension schemes can be transferred. For example, you could transfer your old pension(s) to a personal pension such as a SIPP (self-invested personal pension). 

Pension transfer options

If you’ve had more than one job in your lifetime, it’s likely you’re a member of more than one pension scheme. You could consolidate your pensions by transferring them individually into one scheme. This might make it easier to track and manage your finances. 

Alternatively, you may simply wish to switch pension providers if you feel you could get a better deal elsewhere. 

Reasons to transfer pensions

Transferring your pension(s) could be beneficial for a number of reasons.  

1. Lower charges: You could reduce the cost of your fees. For example, while many pensions charge a percentage fee, the ii Self-Invested Personal Pension (SIPP) charges a low flat fee. Independent research by The Lang Cat has shown this could save you thousands – find out more about our charges. 
2. Ease and convenience: You could make it easier to manage your finances by consolidating your pensions into one scheme. 
3. Wider array of investment choices: You can choose to transfer to a Self-invested Personal Pension (SIPP) if you’d like to take advantage of a wider range of investment options and you are comfortable to take control and make your own investment decisions 
4. Flexibility at retirement: Transferring to a new pension scheme might give you greater control over your drawdown income. Most pension providers are likely to offer you flexibility at retirement. But it's worth checking so that when you come to retire, you can take your pension savings in a way that suits you. 
5. Better service: Transferring your pension to a provider of your choosing means you could pick one that offers better service. This could be especially beneficial if you want more freedom to choose how your pension is invested or are looking for more competitive charges.

Things to consider before transferring a pension

Transferring your pension may not always be beneficial. There are several factors you should consider before transferring.  

Guaranteed /safeguarded benefits 

Some schemes offer guarantees and benefits – such as guaranteed annuity rates, the option to take more than 25% tax-free, and access to benefits before you reach 55. By transferring to a new scheme, you could lose these benefits.  

Exit fees 

Some schemes charge exit fees. The fee may outweigh the benefits of moving – particularly if you transfer a small pension. 

Employer contributions 

Before you transfer from your current workplace pension, check your employer will still contribute as much to your new scheme. You might be better off transferring your old pensions but keeping your existing workplace pension or make a partial transfer only – remember to check if that’s an option you can take advantage of with your workplace pension provider. 

Defined benefit schemes 

Defined benefit pension schemes offer a guaranteed annual income in retirement. It is rarely beneficial to transfer out of a defined benefit pension as you will lose a guaranteed income for life. 

Getting financial advice 

Transferring a pension can be risky if you’re not aware of any benefits you risk losing. We recommend speaking to a financial advisor before transferring any kind of pension. 

Pension scams 

Scammers create attractive pension propositions in a bid to persuade you to transfer your pension to them. Make sure you thoroughly research pension providers before transferring – and if in doubt, seek advice. Find out more about how to avoid pension scams.

What are my pension transfer options?  

The average worker in the UK has 12 jobs before they retire, so it’s likely you’re a member of more than one pension scheme. You could consolidate your pensions by transferring them individually into one scheme. This might make it easier to track and manage your finances. 

Alternatively, you may simply wish to switch pension providers if you feel you could get a better deal elsewhere. Some options include: 

• Transfer to a SIPP. Transferring to a SIPP gives you greater control over investment decisions and is suitable for those who are confident enough to manage their own pension investments. 
• Transfer to a private pension. You could move your pension to a similar provider which offers better investment choice, lower fees or an improved service. 
• Transfer to a workplace pension. Consolidating an old pension into your current employer’s workplace pension can simplify pension management. 
• Leave it where it is. If you are happy with your current fees, service and investment performance, then keeping it with your existing provider may be the best decision. 

Remember that not all pension providers charge the same, before switching make sure you check: 

• Does the new provider charge a set-up fee? 
• What are their annual management charges for any investments? 
• Do they have an admin charge or platform fee? 
• Do they charge for taking money out of your pension? 
• If you’re investing your pension, does the platform charge a trading fee? 

You can still transfer a pension in drawdown  

You can still transfer a pension even if you are taking an income from it. Pension drawdown offers flexible access to retirement funds even if you switch providers. Switching might be a good idea if you find better investment options, lower fees or an improved service elsewhere. 

Pension transfer process   

The pension transfer process has improved dramatically over the last decade thanks to legislation aimed at simplifying people’s access and management of their retirement funds. However, despite it being easier than ever to transfer your pension, it’s important to balance the pros and cons of each provider – if in any doubt, the government’s MoneyHelper service can offer free, impartial guidance on your pension options.  

Since the size of a pension makes it one of your largest financial assets, pension scams are unfortunately too common. The Pensions Regulator therefore closely monitors the processes to transfer a pension, they advise three steps: 

1. Tell your current provider you want to leave. 

Your existing pension provider will ask you for some key documentation: 

• Your personal information including name, address, date of birth and National Insurance Number. 
• Your new provider’s details including their name, address, type of pension scheme and HMRC registration number. 
• If relevant, they’ll ask for your financial adviser’s information and contact details. 

2. Due diligence 

Your existing provider will check that the pension scheme you are transferring to is legitimate and meets all the relevant regulatory requirements. 

3. Approval 

Once your existing provider is happy that your money is not at risk, they’ll approve the transfer of funds. You’ll be kept up to date throughout the process. 

What pensions can I transfer to interactive investor?

You can transfer the following types of pension into the ii SIPP: 

• Personal Pension Plans 
• Pensions in drawdown 
• Other SIPPs
• Some workplace pensions
• Stakeholder Pension Plans 
• Frozen pensions
• Retirement Annuity Plans 
• Executive Pension Plans (EPPs) 
• Occupational Money Purchase Plans 
• Small Self-Administered Schemes (SSAS) 
• Defined Contribution Pension Schemes

In some cases, we will accept the transfer of defined benefit pensions.  

If you wish to transfer a defined benefit pension with a value over £30,000, legally you must seek confirmation from a pension transfer adviser that the transfer will be in your best interests.  

Before you transfer a defined benefit pension, we recommend you speak to a financial advisor. If your pension value is £30,000 or more, you are legally required to provide evidence that a financial advisor has provided you with a positive recommendation to transfer and that the transfer is in your best interests. You can do this by completing and returning our Financial Advice Declaration form.