How much does a Final Salary Pension Transfer Cost?

Transferring your Final Salary Pension to a personal pension arrangement may give you access to a large lump sum and offer you the freedom to invest and spend your pension pot as you see fit, but there can be significant costs and fees involved

The amount you pay could impact your long-term wealth. So exactly how much does a Final Salary Pension Transfer Cost?

The full cost of a Final Salary pension transfer will depend on a number of factors:

  • how much you pay for transfer analysis and advice,
  • what type of investment you choose afterwards
  • and how much you pay for ongoing advice.

It’s worth noting that if you stay within your Final Salary Pension scheme there are no investment charges made to your pension, these are shouldered by your scheme administrator. As a member of a Defined Benefit Pension scheme, the amount of money you receive is guaranteed for life and protected against inflation. Transferring out of a Defined Benefit Scheme carries significant risk and shouldn’t be considered without expert advice. 

For most people transferring out of their existing DB Scheme is not in their best interests.

Graph of Defined benefit transfer value Index 2020 - transfer values reach highest level July 2020

Defined Benefit Pension Transfer Costs

Figures from The Pensions Regulator show that in 2018/2019 alone over £34 billion was transferred out of Defined Benefit Pension Schemes.

Demand for transfers out of these gold-plated pensions schemes was driven mainly by high transfer value offers and the flexibility and freedoms offered within defined contribution arrangements that are not available within a Final Salary pension scheme.

With the huge demand for transfers the Financial Conduct Authority, who oversee financial services firms and financial markets in the UK have put safeguards in place to protect those with defined benefit pensions from giving up their guaranteed benefits without understanding the full risks and costs involved.

The FCA state that for transfers valued over £30,000, you will need to seek the advice of a qualified Pension Transfer Specialist. You’ll need to pay for any financial advice you receive, but the costs aren’t limited to the initial advice you receive. 

Types of costs you might encounter include: 

  1. Transfer Analysis and Advice Costs
  2. Ongoing Financial Advice fee
  3. Wrapper Charge
  4. Annual Management Charge (AMC)
  5. Discretionary Management fees
  6. Additional Fees & ad-hoc costs

1) Transfer Analysis and Advice Fees

Transfer Analysis and advice fees are paid to the Financial Adviser to provide the advice and carry out the transfer on your behalf. Final Salary Pension Transfers need in-depth analysis and can be a lengthy process, transfers can take weeks of work, sometimes months, depending on your scheme administrator and the availability of information.

Transfer analysis involves carrying out in-depth research:

  • Understand your current and future financial position
  • Understanding your goals for retirement both financial and lifestyle
  • A full analysis of the benefits offered by your current pension scheme
  • Risk profiling
  • Transfer Comparator Analysis
  • Planning investment strategies that fit your risk profile and allow you to meet your goals

Any recommendation to transfer must now be in the form of a ‘personal recommendation’ which means the adviser is responsible for the advice they give you. If in the future, you deem that advice to have been inappropriate, you have recourse through the financial ombudsman to make a complaint. Because of this, insurance premiums for firms offering pension transfer advice has skyrocketed. Pension Transfers are considered highly specialised and high-risk areas of business. You’ll have to pay for any advice you receive since your adviser is taking on financial risk by offering advice.

The amount you will pay will vary from firm to firm. You should ask for quotes before undertaking any advice.

2) Ongoing Financial Advice fee

Just like you might pay a management company to oversee a rental property, you’ll want a good financial adviser to manage your money for you. A good financial adviser will maximise your gains in a good market and minimise your losses in a downturn. They’ll keep you on track with your goals, make sure your investments are regularly checked against your risk profile – because things can change.

You’re paying for performance, but you’re also paying for peace of mind. A good financial adviser should become a trusted guide to help you with your financial decision making. 

When it comes to Defined Benefit Pension Transfer makes sure that the Adviser you engage has the required permissions and qualifications to carry out the work and ideally, you want someone who has signed up to the Pension Gold Standard, a code of ethics and higher standards designed to protect the consumer.

If you are a sophisticated investor, you may not have to pay a Financial Adviser to manage your money, you could opt to manage your money yourself. However, since the FCA now require investment advice to be included in a pension transfer recommendation it is unlikely you will be able to self-manage your investments straight away.  

3) Wrapper Charge

Regardless of whether you employ a financial adviser or self-manage your investments your Pension or Platform Provider will levy a fee to use their product. Much like a service charge that you would pay if you owned a flat. It is charged by the company that provides the investment and covers the cost of the running of the platform.

It may also be known as a “product charge”, “platform charge or “policy fee”.

Considering a transfer? Arrange your free introductory call with a qualified Pension Transfer Specialist today. Call us now to schedule 02380 981161

4) Annual Management Charge (AMC)

Another charge that Pension or Platform Providers charge is an Annual Management Charge.

As well as annual fees there may also be dealing costs i.e. fees for buying and selling. Historically the total amount of annual fees was referred to as the TER (Total Expense Ratio) and it showed the real cost of the investment which included the expenses for buying and selling.

EU rules have since replaced Total Expense Ratio (TER) with the Ongoing Cost of Funds (OCF)Funds legally have to publish this figure because it is the TRUE COST of the fund and is usually higher than the Annual Management Charge.

The Ongoing Cost of Funds (OCF) represents all of the charges, including the annual management charge and other charges for services such as keeping a register of investors, calculating the price of the fund’s units or shares and keeping the fund’s assets safe. The OCF must be displayed in the policy Key documents.

5) Discretionary Management fees

Some Financial Advisers may use the services of a Discretionary Manager. A Discretionary Manager adds an extra layer of investment advice, making investment decisions on your behalf depending upon their view of the market.

6) Additional Fees

Some pension products can also have annual SIPP fees, drawdown fees (see our pension drawdown calculator) or other ad hoc costs such as a charge to access your tax-free lump sum or to commence drawdown. These are often known as ‘hidden costs’. They vary from product to product and although they may only be small amounts as fees, they can add up. So it is important to understand exactly what fees you will be incurring.


Whilst Jim may not be a typical example, his story shows that fees can be significantly different from one adviser to the next and it’s important to understand how much you’re paying and benchmark it against the wider market.

Because we’re an independent adviser, we can find the most competitive products and providers in the marketplace to offer similar or improved performing investments at the most competitive price.

When receiving quotes, forecasts and/or reports on your investment performance it is also important to understand if these forecasted or actual performance figures are NET of fees. When talking to a financial adviser always make sure you understand the TOTAL cost of transfer and ongoing management.

If you have a question about Final Salary Pension Transfers that you’d like us to answer, why not email us?

Simon Garber, DIP PFS | Pension Transfer Specialist | Southampton

About the Author

Simon Garber DIP PFS is an Independent Financial Advisor and Qualified Pension Transfer Specialist. He is the Managing Director and Founder of 2020 Financial, based in Southampton, Hampshire. Simon specialises in Pensions and Retirement planning and is a later life planning specialist. He also holds qualifications in investment and life insurance and is a member of the Personal Finance Society and Chartered Insurance Institute.

Simon is passionate about providing the highest standards of customer care and transparency. 2020 Financial were awarded the Pension Gold Standard in 2019. You can find out more about Simon here.

Let’s connect

Considering a transfer? Arrange your free introductory call with a qualified Pension Transfer Specialist today. Call us now to schedule 02380 981161

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The definitive guide to final salary pensions
Final Salary Pension Calculator
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This guide does not constitute personal advice, nor should it be treated as such. It is provided for general information and it is vital (and in most cases a regulatory requirement) that you contact a Qualified Pension Transfer Specialist for personal financial advice and obtain a recommendation to transfer before opting out.

  • If you are a member of a pension scheme with safeguarded benefits, it is likely it would be in your best interests to retain the safeguarded benefits.
  • Make sure you understand all the risks before investing.
  • The value of investments and the income they produce can fall as well as rise and you may not get back your original investment. Once you transfer, you will become responsible for the management of your investments.
  • Any information contained within this website should not be deemed to constitute investment advice and should not be relied upon as the basis for a decision to enter into a transaction, or as the basis for any financial or investment decision. Investors should always seek professional advice in regard to the suitability of any investment.