What to Check Before You Transfer a Pension
The reason to check is simple. Some of what you would give up cannot be bought back at any price.
Before transferring, check for guaranteed annuity rates, protected tax-free cash, a protected early retirement age, employer contributions and exit charges. Any of these can be worth more than the saving you are chasing.
Guaranteed annuity rates
Some older personal pensions carry a guaranteed annuity rate, promising an income far above what is available today. These are frequently worth more than the pot itself and they disappear the moment you transfer. They are not always prominent in the paperwork, so ask the scheme directly whether one applies.
Protected tax-free cash and protected ages
A minority of older schemes allow more than 25% tax-free, or access before the normal minimum pension age. Both are features of that specific scheme. Both are usually lost on transfer, and neither can be bought back.
We are not pension advisers. We introduce you to one who is, and the introduction costs you nothing.
Exit charges
Older contracts sometimes apply a penalty for leaving before a set date. Early exit charges are capped for some people, but not for everyone and not on every contract. Ask for the transfer value and the current fund value separately: if they differ, that difference is what leaving costs you.
Employer contributions and attached life cover
If the scheme is your current employer's, transferring out can end their contributions, which is usually the single most valuable thing about it. Some workplace schemes also carry death-in-service cover that vanishes with the pension. Check before moving anything you are still paying into.
Defined benefit is the one to leave alone
A final-salary pension promises an income for life, usually rising with inflation, often with a pension for a spouse. Few people improve on that by transferring. There are narrow exceptions, mostly around health and estate planning, and they are exceptions. If a firm approaches you suggesting otherwise, that is a reason to stop and check who they are.
A worked example: The guarantee worth more than the pot
Alan finds an old personal pension worth £48,000 with charges higher than a modern platform, and decides to move it. Before transferring he asks the scheme what he would give up.\nThe policy carries a guaranteed annuity rate promising an income far above anything available today. Valued as income, that guarantee is worth considerably more than the charge saving he was chasing. He leaves it where it is. Had he transferred first and asked afterwards, it would have been gone permanently.
Figures are illustrative and rounded, used to show how the rule works. Your own numbers will differ.
A second example: The employer contribution he nearly lost
Priya wants to consolidate everything into one SIPP, including her current workplace pension, because one login is simpler.\nHer employer contributes 8% of salary to that scheme and will not pay into a personal arrangement. Transferring out would have ended the single most valuable feature of the pension in exchange for tidiness. She consolidates the three old pots instead and leaves the live one alone.
At a glance
| What to ask about | Why it matters |
|---|---|
| Guaranteed annuity rate | Can be worth more than the pot; lost on transfer |
| Protected tax-free cash | May exceed 25%; usually lost |
| Protected pension age | May allow access before 55; usually lost |
| Exit charge | Compare transfer value with fund value |
| Employer contributions | Transferring out of a current scheme can end them |
| Death benefits | Cover attached to the scheme can disappear |
Common mistakes
- Chasing a lower charge and giving up a guarantee worth far more.
- Not asking for the transfer value and fund value separately.
- Transferring a current workplace scheme and losing employer contributions.
- Treating a defined-benefit transfer as a normal decision.
We are introducers, not pension advisers. We put you in front of someone who is, and it costs you nothing.
What to do next, in order
- Write to each scheme and ask about all six items in the table above.
- Get the answers in writing before deciding anything.
- For defined benefit above the advice threshold, take regulated advice first.
- Compare like with like: total cost, not just the headline charge.
Key terms, in plain English
- Guaranteed annuity rate
- A promise in some older policies to pay retirement income at a rate far above today's market. Usually lost on transfer.
- Protected pension age
- An earlier access age written into some older schemes. It is a feature of that scheme and is usually lost if you transfer.
- Exit charge
- A penalty some older contracts apply for leaving before a set date.
- Defined benefit
- A pension that promises an income for life based on your salary and service, rather than a pot of money. Final-salary and career-average public-sector schemes are defined benefit.
- Safeguarded benefits
- Guarantees such as a guaranteed annuity rate or protected tax-free cash that trigger extra protections before transfer.
Who this affects most
This matters most to anyone holding a pension started before 2006, where guarantees and protections are concentrated, and to anyone thinking of moving a scheme they are still contributing to. If every pot you hold is a modern workplace pension from a former employer, the checks are quicker but still worth doing.
Check broadband before you make an offer
Broadband speeds can vary street by street, so check the exact address before you commit. Ofcom's free checker shows which broadband speeds and mobile coverage are available at any UK property.
Want all your bills in one?
We can introduce you to a specialist who can combine your mobile, broadband and utilities into one bill. There's no fee for the introduction.
We don't provide these services ourselves. Switching household bills is not a regulated financial service, so FCA protections and the Financial Ombudsman do not apply. We'll only pass your details to the specialist if you ask us to. See our privacy notice.
Common questions
What could I lose by transferring?
Guaranteed annuity rates, protected tax-free cash above 25%, a protected early retirement age, employer contributions and attached life cover. Most of these cannot be recovered once gone.
What is a guaranteed annuity rate?
A promise in some older policies to pay income at a rate far above today's market. It can be worth more than the pot itself, and it disappears on transfer.
Will I pay an exit charge?
Possibly. Ask for the transfer value and the fund value separately. If they differ, the difference is what leaving costs. Charges are capped for some people near retirement but not for everyone.
Should I transfer a final-salary pension?
Almost never. It promises an income for life, usually inflation-linked, often with a spouse's pension. Above a threshold value you must take regulated advice first, and advisers must start from the assumption that a transfer is unsuitable.
Who can tell me what I would give up?
Your existing scheme, in writing. Ask specifically about guarantees, protected ages, charges and death benefits. Then take regulated advice before acting.
How do I find out if I have a guaranteed annuity rate?
Write to the scheme and ask directly whether the policy includes a guaranteed annuity rate or any other guarantee. Do not rely on the annual statement, which often does not mention it.
Is consolidating always bad?
No. Combining several modern defined-contribution pots with no guarantees can genuinely reduce cost and complexity. The risk is consolidating without checking first.
What is the advice threshold for defined benefit?
Above a set transfer value you must take regulated advice before a scheme will act. The threshold is a legal requirement, not the scheme being obstructive.
Where to check the official figures
Pension figures change every tax year. These are the free, official sources. Check the current number before you act on anything here.
- Check your State Pension forecast, GOV.UK
- Check your National Insurance record, GOV.UK
- Pension Tracing Service, GOV.UK
- MoneyHelper, pensions and retirement
- The FCA Register, check any firm
Where to go next
- Combining pensions: our main guide
- The NHS Pension Scheme explained
- The LGPS explained
- The Teachers’ Pension Scheme explained
The bottom line
The reason to check first is that some of what you would give up cannot be bought back at any price. Guaranteed annuity rates, protected tax-free cash, a protected early retirement age, employer contributions and attached life cover are all commonly lost on transfer, and none of them appears prominently on a statement. Write to each scheme and ask about all of them in writing before you decide anything. Consolidating modern pots with no guarantees is often sensible. Consolidating without asking is the expensive version of the same decision.
Want someone to look at your actual pensions?
Tell us what you hold. We will introduce you to a regulated pension adviser who can tell you whether anything is worth moving. If it is not, they will say so.
Talk it through with usWhatsApp us
Open Monday to Saturday, 9am to 8pm
We do not provide pension advice and we are not pension advisers. We introduce you to a carefully selected, FCA-regulated pension adviser. The introduction costs you nothing. If you go ahead, we may be paid a fee by that firm. Pension rules and figures change, and what is right depends on your own circumstances.