How Much Does It Cost to Transfer a Pension?

How Much Does It Cost to Transfer a Pension?

How Much Does It Cost to Transfer a Pension?

When transferring your pension over, it can really vary from provider to provider on what charges may be in place. Some providers charge exit fees whilst other providers may offer to pay your exit fees, or a percentage of this, as an incentive to joining their policy.

Before considering a pension transfer, it is always best to check the exact percentage of exit fees in place, or whether this is just a one-off charge fee. If your provider charges a percentage, this can sometimes even be as high as 10%.

If your pension pot is reasonably high, this could be a dent in your hard-earned savings, especially as you think about your future. This, among many other factors, is why pension transfers should not be done light-heartedly. It is a potentially life-changing financial decision in some cases and should be done so with the correct financial advice in place.

The higher exit fees are usually linked with older pension providers and are something that the government is trying to crack down on. So, fingers crossed, as time goes on, these fees will become somewhat more manageable or potentially negotiable.

The fees themselves can be taken out of your pension transfer value or pension pot, and not necessarily out of your own pocket. It should also be taken into consideration that if you need any legal or financial advice, this will also come at a cost along the way, but this is something that really needs to be done. Think of it as an investment in your finances.

Regardless of whether you go ahead with a transfer or not, it is advisable for yourself and your financial advisor to go over the terms and conditions of your current pension provider’s policy. By doing so, you can get a rough idea about what you may be charged going forward, what benefits you are taking with you and what benefits will be coming to an end.

Some providers may charge only a small exit fee and one that won’t put a dent in your savings going forward. And as said before, more and more providers are offering to pay a percentage towards the exit fee or offer a cash bonus incentive to transfer a pension. Therefore it could all balance out in the end.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.