What Are Pension Transfers?
- Belgravia Capital
- May 31
- 5 min read
If you’re planning for retirement in the UK, understanding pension transfers is vital.
Whether you’ve accumulated several workplace pensions over the years or you’re looking for more flexibility in retirement, transferring your pension can be a powerful financial planning tool.
In this comprehensive guide, we’ll answer the question “What are pension transfers?” in plain English, explore when and why you might transfer a pension, and highlight the benefits, risks, and process involved.
At Belgravia Capital Wealth Management, we aim to help you make clear, confident decisions about your financial future.
Pension Transfers Explained
A pension transfer involves moving your pension savings from one scheme or provider to another. This could mean:
Consolidating multiple pension pots into one
Moving your pension to a provider with better investment options
Transferring from a defined benefit (DB) scheme to a defined contribution (DC) scheme
Changing providers to reduce fees or access more retirement flexibility
It’s important to understand that a transfer doesn’t mean you’re accessing your pension or receiving payments - it’s a reallocation of your pension pot to a different scheme, typically tax-free and within the UK’s regulated pension framework.
Types of Pension Schemes You Can Transfer
Defined Contribution (DC) Pensions
DC pensions are the most common type in the UK today. Your retirement income depends on how much you and your employer contribute and how well the investments perform.
You can transfer your DC pension to another provider for reasons like:
Lower fees
More investment choice
Better online tools
Easier management of multiple pots
These transfers are straightforward and usually handled quickly.
Defined Benefit (DB) Pensions
DB pensions, also known as final salary schemes, offer a guaranteed income for life based on your salary and years of service. These are typically more generous but less flexible.
Transferring a DB pension means giving up that guaranteed income in exchange for a Cash Equivalent Transfer Value (CETV) - a lump sum transferred into a DC pension, where you can access the funds more flexibly.
Important: If your DB pension is worth more than £30,000, you must take regulated financial advice before transferring, as required by the Financial Conduct Authority (FCA).
Why Transfer a Pension?
There are several good reasons to consider a pension transfer:
Consolidation
Many people accumulate several pensions over a working lifetime, especially if they’ve changed jobs frequently. Transferring them into a single plan can:
Make management simpler
Offer a clearer view of retirement savings
Potentially reduce fees
Investment Control
Some older pension schemes may offer limited or poor investment options. Transferring to a modern DC plan can give you access to:
A wider range of funds
ESG and ethical investment options
Online investment platforms with tools to track performance
Flexibility at Retirement
Modern DC pensions often allow flexible access, meaning:
You can take money as and when you need it
You don’t need to buy an annuity
You can leave unspent pension funds to beneficiaries tax-efficiently
This is a key reason people transfer from DB to DC pensions.
Lower Charges
Older pensions may charge high annual management or administration fees. Newer providers often offer lower-cost, more efficient platforms.
When Should You Think Twice About Transferring?
Pension transfers aren’t always the right choice. You may want to avoid transferring if:
You’re in a DB scheme offering a generous guaranteed income
Your pension includes valuable benefits such as a guaranteed annuity rate (GAR)
You’re nearing retirement and don’t want to take investment risk
You’re unsure how to manage investments and prefer the security of a DB pension
Always weigh the certainty of staying put against the flexibility of transferring. For DB pensions in particular, this is a complex and often irreversible decision.
How the Pension Transfer Process Works
Step 1: Request a Transfer Value
Contact your current provider to get a transfer value statement. If it’s a DB pension, they’ll provide a CETV that’s usually valid for 3 months.
Step 2: Review the Benefits of Your Current Scheme
Understand what you’re giving up, particularly for DB pensions. This includes:
Inflation-linked increases
Spouse or dependent benefits
Early retirement options
Any guarantees or bonuses
Step 3: Seek Financial Advice (If Required)
If your DB pension is over £30,000, advice is mandatory. Even if not, speaking to an adviser can help clarify whether the move aligns with your retirement goals.
Step 4: Choose a New Scheme or Provider
Make sure the new pension offers:
Lower fees
Strong fund performance
Flexible drawdown options
Reliable customer support and online access
Step 5: Complete the Transfer
Your adviser or provider will handle the paperwork. Most DC pension transfers are completed within 2 to 6 weeks. DB transfers can take longer due to the additional regulatory checks.
Are Pension Transfers Taxable?
In most UK scenarios, pension transfers are not taxable, provided:
The transfer is between two UK-registered pension schemes
The transfer is direct (not withdrawn and re-invested)
You haven’t taken taxable income from the pension
However, if you withdraw funds instead of transferring them directly, the money may be taxed as income, only 25% of most UK pensions is tax-free.
Can You Transfer a Pension More Than Once?
Yes, you can transfer your pension multiple times, provided the new provider accepts transfers in.
That said, repeated transfers can:
Increase exposure to market timing risk
Incur charges if not carefully managed
Lead to loss of benefits or confusion
It’s best to consolidate and optimise your pension with professional guidance, not jump from scheme to scheme without a clear strategy.
Risks of Pension Transfers
While transferring your pension can be beneficial, it carries risks:
1. Loss of Guarantees
Transferring out of a DB scheme means losing guaranteed income for life.
2. Investment Risk
Once your pension is in a DC scheme, you are responsible for investment choices and outcomes.
3. Scams and Fraud
Unfortunately, pension transfer scams are on the rise. Always ensure you’re working with FCA-regulated advisers and authorised pension providers.
4. Early Access Temptation
Just because you can access your pension at 55 (or 57 from 2028), doesn’t mean you should. Taking too much too early can deplete your retirement income.
What Role Does Belgravia Capital Wealth Management Play in Pension Transfers?
At Belgravia Capital, we help you make strategic, informed pension transfer decisions. Our role includes:
Reviewing your current pensions and identifying potential improvements
Explaining the financial and tax implications of transferring
Helping you avoid costly mistakes or losing valuable benefits
Building a retirement income strategy aligned with your lifestyle goals
Ensuring regulatory compliance and providing full transparency
We specialise in helping high-net-worth individuals plan efficiently for retirement, ensuring that every transfer works in their favour.
So, what are pension transfers?
They are simply the movement of your pension savings from one scheme to another - done for reasons like flexibility, investment choice, lower fees, or better alignment with retirement plans.
But they’re not one-size-fits-all solutions. A pension transfer can be a smart move - but only when done with full understanding of the pros, cons, and long-term consequences.
Always seek qualified, independent advice before making a pension transfer decision, particularly if you’re considering giving up a defined benefit pension or have multiple pensions to manage.
Speak to a Pension Transfer Specialist
If you’re considering a pension transfer and want clear, tailored advice based on your goals and situation, we’re here to help.
Email us at contact@belgraviacapital.co.uk
Let Belgravia Capital Wealth Management help you make pension transfers work for your future.
