The three places fees can arise
People worry most about being charged for the transfer itself — but that is usually the smallest, and often zero. The full picture has three layers: what your old provider charges you to leave, what you pay for advice if you take it, and what your new provider charges you every year afterwards. The third layer, compounding for decades, is almost always the one that matters most.
1. Exit fees from your old provider
The regulatory position is now firmly on your side:
- Personal pensions and workplace contract schemes set up since 2017: early exit charges are banned outright.
- Older plans, if you are 55 or over: the FCA capped early exit charges at 1% of your pot value — and providers cannot increase an existing charge that is below 1%.
- Older plans under 55: the cap does not bite until you reach 55, so some legacy contracts can still levy higher charges — check before you move.
Watch for cousins of the exit fee that work differently: with-profits funds can apply a market value reduction when you leave at certain times, and some 1980s–90s contracts carry capital units or loyalty bonuses you forfeit by leaving early. These are not technically exit fees, so they sit outside the cap. Ask your old provider one precise question in writing: "What is my current transfer value, and is it lower than my fund value for any reason?"
2. Advice fees — if you take advice
Ordinary DC-to-DC transfers do not legally require advice. Defined benefit (final salary) transfers over £30,000 do — regulated advice from an adviser with pension transfer permissions is a legal requirement, and it is a substantial piece of work you should expect to pay a meaningful fee for, payable whether or not the recommendation is to transfer (contingent charging was banned in 2020).
Fee shapes vary, and this is genuinely a market where quotes differ:
- Percentage of the pot — often somewhere around 1–3% for advice and implementation, typically tiered downwards for larger pots;
- Fixed fees — a set project fee for the advice, common for DB transfer work;
- Hourly rates — less common for transfers but offered by some firms;
- Ongoing advice — an optional annual percentage if you want continuing management, on top of the initial fee.
Whatever the shape: fees vary widely between firms for the same work, so always get more than one quote, in writing, with the trigger points spelled out. An FCA-regulated adviser must disclose their charges before you commit. Our guide to pension transfer advice covers when advice is required versus merely sensible, and the full advice process for DB cases is described in our final salary transfer guide.
3. Charges after the transfer — the ones that compound
A transfer that saves you 0.5% a year in ongoing charges is worth far more over 20 years than avoiding a one-off fee. Compare the destination on:
| Charge | What it is | What to check |
|---|---|---|
| Platform / provider charge | Annual fee for holding the pension, flat or percentage | Percentage fees suit small pots; flat fees often win for large ones |
| Fund charges (OCF) | Annual cost of the investments themselves | Index funds are typically far cheaper than active funds |
| Dealing charges | Per-trade costs for shares or funds | Matters if you trade often; irrelevant if you buy and hold |
| Drawdown fees | Charges for setting up or taking income | Many modern platforms charge nothing; some legacy ones still do |
| Transfer-out fee (future) | What the new provider charges if you leave later | Most mainstream platforms have dropped these — check anyway |
We compare total cost of ownership across platforms in our cheapest pension provider analysis and our best SIPP providers guide.
Why a small annual saving beats a small one-off fee
The arithmetic is worth seeing once. Suppose two platforms differ by half a percentage point in total annual cost — say 0.75% versus 0.25%. On a £100,000 pot that is £500 in the first year alone, and because the saving stays invested, the gap widens every year the pot exists. Over a 20- or 30-year retirement horizon, that half-point difference plausibly amounts to a five-figure sum — far more than any 1%-capped exit fee, and typically more than a one-off advice fee too. The reverse logic also holds: paying more after the transfer needs a genuine justification, such as service, features or advice you will actually use.
The comparison that matters is total annual cost — platform charge plus fund OCF plus any drawdown or dealing fees you will realistically incur — not the headline platform fee alone. A cheap platform holding expensive funds can easily cost more overall than a mid-priced platform holding index trackers.
Questions to put to both providers before you move
- To the old provider: what is my transfer value, is it lower than my fund value for any reason, and does this plan carry any guarantees or safeguarded benefits I would lose?
- To the old provider: is there any exit charge, market value reduction or loss of bonus on transfer, and would waiting (for example to age 55, or to a with-profits anniversary) change it?
- To the new provider: what is the total annual cost for a pot my size in the funds I intend to hold?
- To the new provider: what do you charge for drawdown, and what would it cost to leave you in future?
Fees that should make you stop
- Any "fee" requested to release or "unlock" your pension — a classic scam structure;
- Introducer or marketing fees paid to an unregulated third party;
- Charges you cannot get stated in writing;
- Advice that is "free if you transfer" — contingent charging on DB transfers is banned, and the incentive problem it created is exactly why.
Putting it together
Before transferring, write down four numbers: your old plan's transfer value versus fund value (reveals hidden reductions), any exit charge, the total annual cost of the new home (platform + funds), and any advice fee. If the ongoing saving is real and no valuable guarantees are being surrendered, modest one-off costs rarely change the answer — our should I transfer my pension checklist pulls the whole decision together. And if your situation involves multiple pots or larger sums, an FCA-regulated adviser can compare your specific schemes and show the break-even in pounds rather than percentages.