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You may have heard the recent news that the Department for Work and Pensions is planning on cutting down unnecessary delays for savers who decide to transfer their pensions from one provider to another.
Pension transfers are not uncommon. In fact, as you’ll see below, they’re more popular than ever before. That said, they potentially fly in the face of traditional financial planning wisdom that says pensions are best left where they are.
But is this correct against an evolving pensions landscape? We explain what a pension transfer is, how to undertake one, the risks worth bearing in mind, and how the rules might change in this area.
What’s on this page?
A pension transfer is the process of moving some, or all, of your pension savings from one pension provider to another.
Pension transfers are popular nowadays, with an enormous £75 billion shifted between providers last year alone, according to data from Origo. In 2025, 1.7 million transfers took place, up by about 200,000 on the 2024 figure.
Maike Currie, VP Personal Finance at PensionBee, says people move their pensions for “all sorts of sensible reasons”
“It might be to pay lower fees, to choose investments that suit them better, or simply to consolidate old pots so everything is in one place and easier to keep an eye on.
“One word of caution, though. Some older pensions come with valuable extras built in, such as a guaranteed income for life, or a larger, tax-free lump sum. You can lose these by moving, so it's always worth checking what you might be giving up before you switch and taking free guidance if you're unsure."
Most types of pensions can be transferred. Defined contribution (DC) pensions, where you build up a retirement pot based on a combination of contributions and investment growth, are generally the most straightforward. This includes most workplace pensions and personal pensions such as Self-Invested Personal Pensions (SIPPs).
Defined benefit (DB) pensions, also known as final salary pensions, are different. These have long been regarded as ‘gold-plated’ arrangements because they pay a guaranteed income for life. Giving up a benefit such as this requires a lot of thought.
If your DB pension is worth £30,000 or more, you’re legally required to get financial advice before you can transfer it.
The City’s financial watchdog, the Financial Conduct Authority, believes that, on balance, most people are better off keeping a DB pension rather than moving it into a DC scheme.
Transferring your pension can be risky. Sadly, there are a lot of scammers out there nowadays who would like to get their hands on your pension savings.
Crooks and fraudsters target would-be transferees with promises of free pension reviews, early access to their pension pot, or unrealistic returns – all designed to persuade potential victims to hand over their money.
Fortunately, a warning flag system currently exists to pause or block transfers that could be a scam. But it’s not a perfect solution. We deal with this in more detail below.
Pension transfers also carry financial risk. If you transfer a pension, there is a risk you could give up valuable benefits that your old pension provider gave you. This could be guaranteed annuity rates, potential spouse’s pension entitlements, or early retirement terms.
You could also end up worse off in retirement if you transfer a DB pension to a DC pension that is reliant on investment performance to deliver your income. Then there are the practical issues. While most pension transfers go smoothly, some can take months rather than weeks, leaving your money in limbo.
Since 2021, pension providers have had to run potential pension transfers through a warning flag system that is designed to catch scams before people lose their money. There are two levels: red flags and amber flags.
A red flag stops a pension transfer immediately. It is triggered by an event such as you being offered an incentive to transfer your pension, or where you’ve felt pressured or rushed into a decision.
It also flashes where you are contacted out of the blue about a transfer, or because there isn’t enough information to prove you are entitled to make a transfer into a particular scheme.
An amber flag doesn’t block the transfer, per se. Instead, it pauses it. To proceed you must have a safeguarding appointment with MoneyHelper, a service that combines the help of three government-backed financial guidance organisations.
Amber flags can be triggered if the transfer involves high fees, overseas investments, high-risk or unregulated investments, or complex investment structures.
The problem is the system has been setting off too many flags. For example, the overseas investments amber flag is causing a lot of delays. According to PensionBee, it is responsible for more than a third (35%) of all amber flags since 2021, despite international investments being a standard feature of many legitimate pension schemes.
To start the process, you get a statement of your pension’s transfer value from your existing provider.
Transfer values differ depending on whether your pension is DC or DB. For a DC scheme, it is the accumulated contributions made by and on behalf of the scheme member together with any investment returns.
A DB transfer value is essentially a cash amount calculated by the pension scheme’s sponsor as determined by actuarial principles that factor in various assumptions about the scheme member.
Armed with a figure for a transfer value, you then apply to your new provider, who will request the transfer on your behalf. After that, you wait.
Transfers take 10.2 days on average, according to Origo, but the process can stretch to months – especially if the warning flag system is triggered. Transfers are often processed electronically, but some require manual input.
In general, you don’t need permission to transfer your pension. The exception is if you want to move a DB pension worth more than £30,000. Then you are legally required to speak to a regulated financial adviser before the transfer.
While it may not be a legal requirement, getting specialist financial advice before you transfer your pension is worth considering.
Advisers can help you weigh up what you’re giving up against what you stand to gain. They can also check for scams and make sure the scheme you want to move to fits your circumstances.
Sarah Coles, head of personal finance at AJ Bell, says: “Before you move, you need to check you’re not going to face exorbitant pension exit charges that unwind any benefits.”
“You need to be completely confident that you are moving to a legitimate firm, too, because there are scammers who operate in this sphere. If you’re uncertain, it’s better to take financial advice and be confident in your decisions than to make a mistake.”
The government is now consulting on changes to the current regulations with the aim of cutting the number of legitimate pension transfers that are getting slowed down by the warning flag system. At present, certain transfers can go ahead automatically without flag checks.
Experts hope this could be broadened to include any schemes that trustees deem reputable. So, transfers to FCA-regulated pension schemes, such as SIPPs, could skip the checks altogether. Another change would be to remove the amber flag for overseas investments, which causes most of the delays.
Rachel Vahey, head of public policy at AJ Bell, says: “Rewriting these regulations will mean more transfers can progress smoothly and quickly, without getting caught up in the transfer delays and bureaucracy currently being invoked by some pension schemes. “This will help members manage their pensions, improve outcomes, and build trust in the pension industry.”
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