Current figures suggest pension savers could be losing £1.7 billion from their retirement pot by transferring pension savings without seeking advice.
Statistics released by the UK’s biggest workplace pension provider reveal that, since June 2024, pension transfer risk has increased by 42%. Based on current trends, the cost of making uninformed pension transfers could escalate into a multi-billion-pound problem by 2027.
53% of pension savers don’t really understand how transfers work
This isn’t a new problem, but it is growing into a far more expensive issue; more people are at risk of losing valuable savings that could impact their financial security in later life.
Pension savers often make pension transfer decisions without first understanding the potential financial consequences.
In fact, 53% admit they “don’t really understand how transfers work”, and 20% consider them a gamble.
Meanwhile, 96% of pension savers think “pension providers should be required to tell people about the impact of the charges they will pay if they transfer a pension to a new provider”.
Transferring pension savings without advice could leave you £70,000 poorer in retirement
Data suggests that people could be left more than £70,000 poorer in retirement if they don’t understand charges when transferring their pension. Encouragingly, 65% of pension savers said they’d need professional help to consolidate a pension.
If you’re thinking of transferring your pension savings, ask yourself three key questions:
1. Why do I want to move my savings?
Before transferring your pension, take a moment to understand why you want to move your savings.
There are numerous reasons that could lead you to transfer your savings, including:
• Reduced fees
• Access to a wider range of investment options
• Consolidation of multiple pots into a single arrangement to simplify retirement planning.
Whatever your reason, it’s crucial to be clear about your motivation. Ask yourself whether transferring will genuinely help you reach your long-term goals – or if you’re simply reacting to a short-term incentive or promotional offer.
2. Do I understand the fees and charges?
Before you move your savings, make sure you fully understand all the fees and charges that may apply – and how they compare with your existing scheme.
Paying higher fees could mean more of your hard-earned contributions go towards charges rather than growing your retirement pot. Over the lifecycle of your pension, even seemingly small differences in annual fees could add up to thousands of pounds.
3. Am I at risk of falling victim to a scam?
Pension scams are more widespread than you may like to believe. According to data from ActionFraud, in 2024, victims in the UK lost more than £17.5 million to financial fraudsters.
Read more: Pension scams: 1 in 4 savers are at risk – here's how to avoid falling victim
To protect yourself against pension scammers, remember the following rules:
• Research – Thoroughly research your adviser. Are they qualified? Where are they regulated?
• Resist the pressure – Never be pressured into signing anything that you’re not absolutely sure you understand.
• Review your personal circumstances – Ensure that your adviser has spent time finding out about your personal circumstances, your goals, and your appetite for risk.
• Request full transparency around costs and charges – Make sure your adviser is fully transparent and you know exactly what costs and charges apply.
If in doubt, get in touch. We’ll explore the offer and help you understand the facts behind the promises being made.
We’re here to help you make an informed decision before you transfer your pension
Transferring a pension can be one of the biggest financial decisions you make. Getting it wrong could lead to significant costs in retirement.
While transferring your pension savings without taking professional advice could lead to reduced income in retirement, that doesn’t mean you can’t benefit from moving to a new arrangement, or combining multiple pensions into one easy-to-manage scheme.
However, as the alarming figures above show, it’s important to get professional advice from an expert before you make a move.
We are here to help:
• Assess whether transferring is the right option for you.
• Compare different pension schemes and explain the true costs.
• Conduct due diligence to help you avoid scams or unsuitable investments.
While it’s important to understand the benefits and drawbacks of combining your pension savings, it’s far more important to discuss how they fit in with your plans. We are happy to chat about your situation and answer any questions you may have about transferring your pension.
Get in touch
With our guidance, you can decide whether a pension transfer will help you meet your financial goals.
For expert guidance on how to protect and grow your pension savings, get in touch. Email enquiries@alexanderpeter.com or call us on +44 1689 493455.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
