What Is the Process of a Pension Transfer?

If you’ve built up one or more pensions over the course of your career, there may come a time when you consider moving them to a new provider.

Whether it’s to consolidate old workplace pensions, gain more flexibility in retirement, or reduce fees, many people ask:

“What is the process of a pension transfer?”

In this article, we explain exactly how pension transfers work in the UK, step by step, so you can make confident, informed decisions.

Whether you’re transferring a defined contribution (DC) pension or considering a transfer from a defined benefit (DB) scheme, understanding the process is key.

What Is a Pension Transfer?

A pension transfer is the process of moving your pension savings from one pension provider or scheme to another.

You are not withdrawing or spending the money, it remains in a tax-advantaged pension wrapper.

The key reasons people transfer pensions include:

• Combining multiple pensions for easier management

• Reducing fees or improving investment performance

• Accessing more flexible retirement income options

• Leaving behind outdated or restrictive schemes

As long as the transfer is made directly between UK registered pension schemes, it is usually tax free.

Step 1: Review Your Existing Pension

Before starting the transfer process, it’s important to evaluate your current pension. This includes:

• Checking the current fund value

• Reviewing the scheme’s investment options

• Understanding annual charges and any exit fees

• Identifying any guarantees, like protected tax-free cash or guaranteed annuity rates

For defined benefit pensions, it’s also essential to understand the benefits you’re being offered and how they compare to a transfer value.

Step 2: Clarify Your Reasons for Transferring

Ask yourself why you’re considering a transfer. Are you trying to:

• Combine several old pensions into one?

• Move to a provider with more investment options?

• Reduce the fees you’re paying?

• Access flexible drawdown in retirement?

• Improve how your pension passes to beneficiaries?

Having a clear purpose ensures your transfer aligns with your long-term goals.

Step 3: Request a Transfer Value

Once you’ve reviewed your current scheme, the next step is to ask your provider for a transfer value.

For defined contribution pensions, this is the current market value of your pension pot.

For defined benefit pensions, you’ll receive a Cash Equivalent Transfer Value (CETV). This is the lump sum that your provider estimates is equal in value to the future income you’re entitled to under the scheme.

A CETV is typically valid for three months. During this time, you can choose to proceed or request a new valuation later if the deadline passes.

Step 4: Compare New Pension Providers

Now it’s time to choose where your pension will be transferred. Look for a provider that suits your retirement objectives, with considerations such as:

• Lower annual charges

• A wider range of investment choices

• Strong online tools and customer service

• Flexibility for income drawdown

• A clear and transparent fee structure

This step is about more than just cost - it’s about choosing a provider that will give you control, visibility, and flexibility throughout retirement.

Step 5: Seek Professional Financial Advice (If Needed)

If you’re transferring a defined benefit pension worth over £30,000, UK law requires you to take regulated financial advice from an FCA authorised adviser.

Even if you’re transferring a defined contribution pension, regulated advice is highly recommended, especially for larger pots or complex scenarios.

A qualified adviser can help ensure the transfer is in your best interests and that you’re not giving up valuable features or exposing yourself to unnecessary risk.

Step 6: Complete Transfer Forms

Once you’ve selected a new provider, you’ll need to complete a series of forms. These may include:

• A discharge form from your current provider, allowing them to release your pension

• A new pension application with the receiving provider

• Investment instructions for how you want your funds allocated

• ID verification documents if not already on file

Some providers offer digital transfer options, which can speed up the process significantly.

Step 7: Providers Coordinate the Transfer

After the paperwork is submitted, your new provider will contact your existing provider to arrange the transfer. This includes:

• Verifying your identity and pension details

• Requesting payment of the transfer value

• Confirming the method of transfer (cash or, less commonly, in-specie)

During this phase, both providers handle most of the work behind the scenes. Delays are rare, but can occur if the old scheme requires manual processing or additional documentation.

Step 8: Your Pension Funds Are Transferred

Once everything is confirmed:

• The old provider sells your current pension investments

• The funds are sent in cash to your new pension scheme

• The new provider invests the funds based on your selected portfolio

In some cases, it may be possible to transfer the investments without selling them. This is known as an “in-specie” transfer.

However, this depends on the providers involved and the investments held.

After the funds arrive, the old scheme is closed, and your new pension becomes the active one.

Step 9: Confirmation and Ongoing Management

Once the transfer is complete, your new provider will issue a confirmation. You should now have access to:

• A dashboard or account portal showing your pension balance

• Investment performance reports

• Tools to change your investment mix or update beneficiaries

• Drawdown or retirement income settings, depending on your age and plan type

From this point on, you manage your pension through the new scheme, which should now align more closely with your needs.

Is a Pension Transfer Tax-Free?

Yes, provided the transfer is handled correctly. Transfers between UK registered schemes are typically tax-free as long as:

• The funds are not withdrawn or accessed before transferring

• The transfer is made directly between schemes

• The transfer does not trigger unauthorised payment rules

However, if you take cash from the pension and then reinvest it, the withdrawal could be taxed as income (beyond the 25% tax-free lump sum allowance). Always arrange a direct transfer to avoid unnecessary tax.

Can You Transfer a Pension If You’ve Started Taking Income?

You may still be able to transfer your pension, depending on how you’re accessing it:

• If you’re using flexi-access drawdown, you can often transfer your pension to another drawdown scheme.

• If you’ve purchased an annuity, this cannot be transferred as it’s a lifetime product.

• If you’ve started receiving income from a defined benefit scheme, you can no longer transfer that pension.

It’s important to understand your pension’s status before initiating a transfer.

What Are the Risks of Transferring your Pension?

Pension transfers can be highly beneficial, but they’re not risk-free. Risks include:

• Losing valuable benefits, such as guaranteed annuity rates, protected tax-free cash, or generous death benefits

• Poor investment choices if you’re not confident managing your own pension

• Exposure to market volatility, especially just before or during retirement

• Transfer delays, particularly from legacy providers or DB schemes

• Falling victim to scams, especially if contacted by an unregulated firm

To mitigate these risks, always work with FCA authorised providers and seek regulated advice where appropriate.

How to Make a Pension Transfer Work in Your Favour

• Understand your current pension: Know what you’re giving up and what you’re getting.

• Set clear goals: Whether it’s consolidating, reducing costs, or improving flexibility, have a clear reason for transferring.

• Choose your new provider carefully: Look beyond marketing and compare based on performance, fees, and features.

• Don’t rush: Take your time to gather all the information and make a fully informed decision.

• Seek professional advice: Especially if your pension is complex, valuable, or includes safeguarded benefits.

How Belgravia Capital Wealth Management Can Help you Transfer Your Pension

At Belgravia Capital, we provide tailored, regulated support for every stage of the pension transfer process. Our services include:

• Reviewing existing pensions and identifying risks and opportunities

• Explaining transfer values and benefit comparisons

• Recommending suitable platforms and investment strategies

• Advising on drawdown planning and tax efficiency

• Managing the entire transfer process on your behalf

We act in your best interest and work with FCA authorised platforms to ensure your pension transfer is secure, strategic, and beneficial.

Final Thoughts

The process of a pension transfer is structured and manageable - but it’s also a significant financial decision.

Whether it’s worth it depends on what you’re trying to achieve, the nature of your existing pensions, and the quality of the new provider.

Handled correctly, a pension transfer can bring clarity, control, and greater potential in retirement. Handled poorly, it can mean lost benefits, extra fees, and unnecessary risk.

Take the time to understand the process, explore your options, and speak with a trusted adviser before making your move.

Speak to a Pension Transfer Expert Today

If you’re considering a pension transfer and want expert guidance through every step, we’re here to help.

Email us at contact@belgraviacapital.co.uk

Belgravia Capital Wealth Management - secure, informed, and strategic pension planning built around you.