low cost pension transfer advice

Pension Transfer Advice in 2020

You may want to transfer your final salary or defined benefit pension for a variety of reasons. Although transferring can be financially beneficial, the process complicated. The transfer can be to another employer, or if done at retirement it could be to an income drawdown product.

So, the decision to transfer should not be made lightly. This article outlines some things you should consider before making a pension transfer.

Should I seek pension transfer advice?

To help with your decision, it is a good idea to seek the services of a financial adviser. You might need to seek regulated financial advice:

  • If the scheme you want to transfer is a workplace defined benefit pension scheme and the value of your pension benefit is more than £30,000.
  • If this is the case, you legally have to take professional advice from a regulated financial adviser. This law is in place by the Financial Conduct Authority (FCA) and is there to make sure you make an informed decision.
  • If the value of your pension is less than £30,000, it is still a good idea to consider taking financial advice before transferring. This is so you make absolutely sure you make the best decision for you.

Taking financial advice also ensures you are protected if things go wrong, as you’ll be able to use the available complaints and compensation schemes.

How much does pension advice cost?

Advising on defined benefit pension transfers is a specialist area, whether that be taking early retirement, ill-health retirement or normal retirement. Advisers must meet the qualification requirements set by the FCA. This means advice on this area will not be cheap. Such charges vary, depending on factors like:

  • An adviser’s experience
  • The services offered by the adviser
  • The adviser’s cost base
  • The value of your pension

Although costs differ, as a ballpark:

  • The FCA suggests that the average charge is 2 percent to 3 per cent of the transfer value. So if your pension was valued at £140,000, you could expect to pay between £2,800 and £4,200
  • The Independent Advice Organisation concludes that on average, you can expect to pay £3,800 for pension transfer advice

cash equivalent transfer value (Cetv)

How to get low-cost pension advice

Given the cost of pension transfer advice, it is worth exploring these low-cost pension transfer advice possibilities before contacting a private adviser:

Here is a video on whether you should transfer or not.

Free and impartial pension advice

You can also get free and impartial information about transferring your pension from:

Finding the right financial adviser

If you do decide to seek private financial advice, it is important that you find the best financial adviser for you. Before appointing an adviser, you should:

What to expect from a financial adviser

As well as informing you on the pros and cons of transferring your pension, you can expect your adviser to:

  • Ask about your finances and personal circumstances. This is so they can assess how to proceed in a way that is best suited for you. The more information you have prepared when you meet an adviser, the more you will benefit. This includes clear details on the worth of your pension and other income
  • Check the difference between defined benefit and defined contribution arrangements
  • Give you a summary of the pros and cons of their approach
  • Ask if you’ve discussed your decision with your spouse or partner as your choice is likely to affect them too
  • Compare the benefits of transferring your pension and decide the best way forward
  • If you are transferring to a SIPP, your adviser will assess your options and create a portfolio for you. You can then decide whether to manage that portfolio yourself or pay an ongoing charge for an adviser to manage it

defined benefit pension transfer

Can I transfer a defined benefit pension to a SIPP?

A SIPP is a self-invested personal pension. It offers more freedom of investment than you would have from a traditional personal pension provider. Most schemes will allow you to transfer to SIPP, but:

  • If you’re in an ‘unfunded’ public sector pension scheme, you will not be able to transfer your pension
  • Unfunded public sector schemes include the Teacher’s scheme and the NHS scheme

You are eligible to transfer if:

  • You’re in a private sector defined benefit scheme
  • You’re in a funded public sector pension scheme like the local government pension

Pension transfer value

If you decide to transfer, it is important to understand your pension transfer value. This is to make sure you’re getting a good deal:

  • Your pension transfer value is the cash sum equivalent of the benefits you’ve collected in your pension
  • A final salary pension transfer value is the sum of money your employer will offer if you leave the pension scheme, and give up your right to any future income from the plan

Cash equivalent transfer value

Before transferring, you must apply for a cash equivalent transfer value statement or a CETV. The CETV will:

  • Show your pension at the date of leaving the scheme
  • The way that the pension will increase in value until the point of your retirement
  • The transfer cash value available to you

It is an important piece of information:

  • You need it so you can compare your pension transfer value with your final salary pension transfer value. It is legally required that you get one before making a transfer.
  • If you are in a funded Final Salary Pension Scheme, you have the right to a CETV statement
  • Your scheme must provide this within 3 months of any request
  • However, you do not have a legal right to a CETV in the 12-month period before retirement

CETV Calculators

It is also possible to calculate your CETV yourself. This way you can get a rough estimate of the benefits of transferring. You can use online calculators such as this one to do so – https://www.finalsalarytransfer.com/p/67/db-pension-transfer-value-calculator

These calculators provide a realistic estimate, but they should not be used as a replacement for professional advice.

cetv calculator

What are the pension transfer rules?

Most schemes will allow you to transfer your pension to another pension scheme, either:

  • A new employer’s workplace pension scheme
  • A personal pension scheme
  • A self-invested personal pension (SIPP)
  • A stakeholder pension (SHP)

You can generally transfer at any time up to a year before you are due to start drawing retirement benefits. However:

  • You may be charged fees to transfer
  • Transferring your pension pot anywhere else will be an ‘unauthorised payment’, and you may have to pay tax on the transfer
  • You should always check the amount of fees charged for the transfer and check that these do not cancel out the benefits of transferring
  • By transferring, you may lose benefits that can only be provided by the original scheme such as guaranteed income or life cover
  • Transfers from unfunded public sector schemes to defined contribution schemes are not permitted

The process is complicated and governed by a strict set of rules designed to protect you. So, it is a good idea to seek advice from a regulated financial adviser.

Can I transfer a pension from a previous employer?

It is possible to move a pension from an old employer at any time. The more pensions you have, the more it might be advisable to move them into one so you avoid losing any.

If you think you might have already lost track of a pension, you can use the governments Pension Tracing service to find it 


If someone contacts you unexpectedly and says they can help you to transfer your pension it is likely to be a scam.

You can read more about how to spot a scam at https://www.moneyadviceservice.org.uk/en/articles/how-to-spot-a-pension-scam

pension transfer advice cost