Transferring Your Pension to a SIPP: A Complete Guide for 2025
With over £85,000 being the average self invested personal pension (SIPP) transfer amount in 2025, more UK savers are taking control of their retirement planning than ever before. If you’re feeling a bit confused or uninspired by the investment options in your current pension scheme, transferring your pension to a SIPP could be your ticket to a retirement fund that works as hard as you do.
A SIPPs can offer more investment flexibility than traditional workplace or personal pension schemes, but this freedom does come with increased responsibility and possible risks. The decision to transfer your pension isn’t one to take lightly, especially with regulatory changes on the horizon and the possibility of losing valuable benefits from your existing pension provider.
This no-nonsense guide, we’ll walk you through everything you need to know about pension transfers, from weighing up the pros and cons, to navigating the transfer process with confidence.
TL;DR
SIPPs provide unmatched investment control and flexibility compared to traditional pension schemes.
You can transfer pensions like defined contribution schemes easily, but defined benefit pension transfers over £30,000 need a nod from a qualified financial adviser.
Cash transfers take 2-6 weeks. Investment transfers (in-specie) takes 8-12 weeks.
SIPP fees are typically cheaper than some outdated personal pension schemes.
From April 2028, the normal minimum pension age will increase from 55 to 57.
Watch out for exit fees from your current pension provider.
What’s a SIPP, Anyway?
A self invested personal pension (SIPP) is like a turbo-charged pension pot. Unlike your bog-standard workplace pension or personal pension scheme, a SIPP hands you the keys to a massive range of investment options - think UK and global shares, exchange traded funds, investment trusts, bonds, and even commercial property (with full SIPPs).
For 2024/25, you can pump up to £60,000 a year into your SIPP (based on your earnings), and HMRC chips in 20% tax relief automatically. That’s £20 for every £80 you invest. Higher earners? You can claw back even more via self-assessment.
How SIPPs Stack Up Against Other Pensions
👔 Workplace Pensions: Workplace pensions come with employer contributions which is 👌. But most limit you to a pre-selected range of funds, so offer minimal investment control.
👤 Personal Pension Schemes: Traditional personal pensions typically offer more investment choice than workplace pensions, but you’re tied to the pension provider’s investment platform. Older plans can sting with high fees.
🚀 SIPPs: Total freedom to build your retirement fund with maximum investment control, plus the ability to hold multiple investments in the same tax-efficient wrapper. You’re the boss, but this flexibility means more active management and investment risk.
Which Pensions Can You Transfer to a SIPP?
Most UK pensions can be transferred to a SIPP, but the rules depend on the type of pension you've got.
Can Be Transferred
Defined Contribution (DC) Workplace Pensions: Auto-enrolment schemes, group personal pensions, and old pensions from past jobs. Most are usually straightforward to transfer to a SIPP.
Personal Pensions and Stakeholder Pensions: Almost always eligible for transfer to a SIPP, even older policies..
Additional Voluntary Contributions (AVCs): If held as separate pot from main workplace pension, AVCs can often move independently.
Section 32 Buy-out Policies: These policies, often created when leaving a defined benefit scheme, can usually be transferred unless they contain guaranteed benefits.
Need Financial Advice
Defined Benefit Pensions: If you have a final salary pension or career average revalued earnings (CARE) scheme worth more than £30,000, FCA regulations require you to take advice from a qualified financial adviser before transferring. This requirement exists because defined benefit schemes typically provide guaranteed income for life, which is very difficult to replicate with a SIPP.
Schemes with Safeguarded Benefits: Any pension with guaranteed annuity rates, protected pension age (allowing access before 55), or enhanced tax-free cash percentages requires specialist pension advice before transfer.
Can't Be Transferred
State Pension: The basic state pension and new state pension can't be transferred to any private pension scheme.
Unfunded Public Sector Schemes: Pensions from the NHS, Teachers’ Pension Scheme, Armed Forces, and most civil service schemes can't be transferred as they’re unfunded government schemes.
Why Bother Transferring to a SIPP?
Take Control of Your Investments
Perhaps the biggest draw to transferring your pensions to a SIPP is the expansion of investment options and the freedom to invest how you want. While your current pension provider might offer 20-50 funds, a SIPP typically provides access to thousands of investments, if that's what you want, including:
Individual UK and international shares
Government and corporate bonds
Exchange traded funds (ETFs) covering global markets
Investment trusts offering exposure to alternative assets
Commercial property (with full SIPP variants)
You can tweak your pension fund without triggering income tax or capital gains tax, rebalance based on market moves, or chase bold strategies your current provider can’t touch.
Consolidation Benefits
If you’ve changed jobs multiple times, you'll likely have a few pension pots scattered across different providers. Consolidating all your pensions into a single SIPP offers some advantages:
Easier Management: Instead of tracking multiple annual statements and logging into different provider websites, you’ll have one comprehensive view of your retirement savings.
Lower Fees: Ditch duplicate charges, e.g., if you have four pension schemes each charging £120 annually, consolidating to a single SIPP with a £200 annual charge saves £280 per year.
Smarter Strategy: Avoid overlapping investments and build a cohesive retirement fund.
Save on Costs
SIPPs can be a bargain compared to old-school personal pension schemes. Annual fees of 0.25%-0.45% beat the 1.5%+ some legacy plans charge. For a £200,000 pension pot, that’s £700 a year versus £3,000—saving you a fortune over 20 years. Plus, many SIPP providers offer “clean” funds without hidden commissions, and dealing fees are typically £9.95-£11.95 per trade.
Risks Not to Ignore
Investment Risk and Responsibility
With a SIPP, you’re the one calling the shots. If markets tank, your pension pot could take a 20-35% hit, like in 2008 or 2020. Unlike workplace pensions with pro-managed funds. But practically, with a long enough time horizon compound growth should do much of the work.
Loss of Valuable Benefits
Some existing pensions come with perks you’d lose:
Guaranteed Annuity Rates: Old policies might offer 8%+ rates, way better than today’s 6% market rates for a lifetime annuity.
Protected Tax-Free Cash: Some schemes let you take more than the standard 25% tax-free lump sum.
Protected Pension Age: Access before 55 (or 57 from 2028) is rare and valuable.
Employer Contributions: If you move your active workplace pension (which should only be done with some proper consideration), and you’ll kiss goodbye to those free contributions from your employer.
Exit Fees and Charges
Your current pension provider might hit you with:
Admin charges (£25-£500)
Market value reductions on with profits fund investments
Early withdrawal penalties on certain bonds
Some SIPP providers will cover exit fees up to £500, but factor these into your decision.
Regulatory Changes
The normal minimum pension age rises to 57 in April 2028, impacting anyone born after April 6, 1971. Also, from April 2027, death benefits from pensions might face 40% inheritance tax if you pass away after 75.
How to Transfer Your Pension to a SIPP
Step 1: Research and Compare SIPP Providers
Start by comparing the major SIPP providers. Key factors to evaluate include:
Annual Charges: Platform fees typically range from 0.25% to 0.45% for pension pots under £250,000, with some providers offering capped fees for larger balances.
Investment Platform Quality: Consider user interface, research tools, and range of available investments. Some providers offer model portfolios and fund ratings to help guide your decisions.
Customer Service: Check customer satisfaction ratings and complaint levels with the Financial Ombudsman Service.
FCA Authorization: Ensure your chosen provider is properly regulated and covered by the Financial Services Compensation Scheme up to £85,000.
Step 2: Get a Transfer Value Statement
Contact your existing pension provider to get a current transfer value statement, also known as a cash equivalent transfer value. This shows:
The current value of your pot
Any exit fees or penalties
Details of any protected pension age or guaranteed benefits
How long the quotation remains valid (typically three months)
This step usually takes 2-3 weeks and is essential for making an good decision on whether to move forward with the transfer.
Step 3: Choose Transfer Method
You have two main options for transferring your pension:
Cash Transfer: Your current pension provider sells all investments and transfers the proceeds as cash to your new SIPP. This process typically takes 2-6 weeks but means you’re out of the market during the transfer period, potentially missing gains or avoiding losses.
In-Specie Transfer: If your new SIPP provider supports the same investments held in your current pension, assets can be transferred directly without selling. This process takes 8-12 weeks but avoids market timing risk.
Most major providers use the Origo electronic transfer system, which speeds up the process and reduces paperwork errors.
Step 4: Complete Transfer Application
Once you’ve chosen your SIPP provider and transfer method, you’ll need to:
Complete the transfer application forms with personal details and existing pension information
Provide identity verification documents
Sign transfer discharge forms giving your new provider authority to claim your pension
Submit any additional documentation required by your current pension scheme
Your new SIPP provider will handle most of the paperwork, but you may need to respond to queries or provide additional information during the transfer process.
Transfer Costs and Charges
SIPP Provider Fees
Annual Management Charges: Most SIPP providers charge between 0.25% and 0.45% annually on pension pot values up to £250,000. Some providers offer flat fees for larger balances or cap charges at specific amounts.
Dealing Charges: Most providers charge £9.95 to £11.95 per investment transaction, though some offer reduced rates for regular investing or waive charges for certain fund purchases.
Setup and Admin: Many providers waive setup fees for pension transfers above £20,000. Ongoing admin is typically included in the annual management charge for platform SIPPs.
Exit Fees from Current Provider
Admin Charges: Standard exit fees range from £25 to £500 depending on your current pension provider and the complexity of your holdings.
Market Value Reductions: Some with profits fund investments may be subject to market value adjustments, particularly during adverse market conditions. These can reduce your transfer value by up to 20% in extreme cases.
Early Withdrawal Penalties: Certain investment bonds or guaranteed products may charge penalties for early withdrawal, though these are less common in modern pension schemes.
Exit Fee Reimbursement: Some SIPP providers offer to reimburse exit fees up to £500 as an incentive for large transfers, effectively reducing the cost of switching.
How Long Does it Take?
Electronic Transfers
Most modern pension providers use the Origo electronic transfer system, which speeds up the process a lot:
Cash transfers: 10-15 working days for the electronic instruction, but 2-6 weeks total including fund liquidation
Standard processing: Most straightforward transfers complete within 4-6 weeks
Paper-Based Transfers
Older pension providers or complex schemes may require manual processing:
Timeline: 4-8 weeks for standard transfers
Delays often occur due to missing paperwork or slow response times from legacy providers
In-Specie Transfers
Transferring investments without selling requires additional registration and paperwork:
Typical timeframe: 8-12 weeks
Additional time needed for investment re-registration and platform compatibility checks
Complex Cases
Transfers involving defined benefit schemes, SSAS arrangements, or international elements often take longer:
Timeline: 12-20 weeks due to additional regulatory requirements and validation processes
May require specialist pension advice and additional documentation
Delays are most often due to incomplete applications, missing identity documents, or communication issues between providers.
Tax Implications
Transferring between registered UK pension schemes is tax-neutral, so you won’t face any tax charges on the transfer value itself. The pension transfer process doesn’t trigger income tax or capital gains tax.
Ongoing Tax Treatment
Tax Relief on Contributions: You continue to receive 25% tax relief on new contributions to your SIPP, up to the annual allowance of £60,000 or 100% of your UK earnings, whichever is lower.
Tax-Free Lump Sum: You can still take 25% of your SIPP value as a tax-free lump sum when you start drawing benefits.
Income Tax on Withdrawals: Any pension income drawn from your SIPP will be subject to income tax at your marginal rate, just like your current pension scheme.
Recent Tax Changes
Inheritance Tax: From April 2027, death benefits from pension funds including SIPPs may become subject to inheritance tax at 40% if death occurs after age 75. This is a big change from the current treatment where inherited pension pots are generally inheritance tax-free.
Pension Age Changes: The normal minimum pension age increases from 55 to 57 in April 2028, impacting when you can first access your SIPP without penalty.
Choosing the Right SIPP Provider
Key Selection Criteria
Investment Platform Quality: Look for providers with an intuitive platform, tools, and portfolio trackers. The quality of the platform really impacts your ongoing experience managing your retirement fund.
Range of Investments: Make sure your chosen provider supports the types of investments you want to hold, whether that’s international shares, bonds, investment trusts, or alternative investments through exchange traded funds.
Charges and Fees: Compare not just annual management charges but also dealing costs, particularly if you plan to trade often or hold a mixed portfolio requiring regular rebalancing.
Customer Service: Check independent ratings and Financial Ombudsman Service complaint levels. Quality customer service becomes crucial when you need help with complex investment decisions or technical issues.
Research and Guidance: Some providers offer model portfolios, fund ratings, and investment research that can help guide your decisions, particularly valuable for less experienced investors.
When to Stick with Your Current Pension
Valuable Existing Benefits
Guaranteed Annuity Rates: If your current pension offers guaranteed annuity rates of 8% or higher (common in policies from the 1980s and 1990s), transferring might not be the best move. Current annuity rates are typically around 6%.
Final Salary Pension Benefits: Defined benefit schemes providing guaranteed income for life are extremely valuable. The FCA found that most people are worse off transferring out of defined benefit schemes unless they have specific circumstances like serious ill health or no dependents.
Protected Pension Age: Some contracts allow access before age 55, which becomes increasingly valuable as the normal minimum pension age rises to 57 in 2028.
Enhanced Tax-Free Cash: Contracts offering more than the standard 25% tax-free cash represent significant value that cannot be replicated in a SIPP.
High Exit Penalties
Don’t transfer if exit fees exceed 5% of your pension pot value or if market value reductions would really hit your transfer value. The costs may outweigh any potential benefits from SIPP flexibility.
Small Pension Pots
For pension savings under £10,000, SIPP annual charges may be disproportionately high compared to the potential benefits. Simple stakeholder pensions or workplace schemes might be more cost-effective.
Not Comfortable Choosing Investments
SIPPs need more active management. So if you're not comfortable choosing how your pension is invested, you might be best sticking with your default workplace pension with professional management.
Current Employer Contributions
Transferring your active workplace pension means losing valuable employer contributions. Unless you’re leaving your job, it’s usually better to keep your current workplace pension and consider opening a separate SIPP for additional contributions.
FAQ
Can I transfer my workplace pension to a SIPP while employed?
Yes for old, frozen pensions from past jobs. But moving your active workplace pension means losing employer contributions. Most keep the current one and transfer other pensions.
How long does a SIPP transfer take?
Cash transfers: 2-6 weeks. In-specie transfers: 8-12 weeks. Electronic is faster than paper-based.
What happens to my pension during transfer?
Cash transfers - Investments sold, you’re out of the market. In-specie transfers - Investments stay active but may be illiquid during re-registration.
Can I transfer part of my pension?
Most defined contribution pensions allow partial transfers, but defined benefit or drawdown SIPPs often don’t.
Will I lose benefits?
Possibly - check for guaranteed annuity rates, protected tax-free cash, protected pension age, or employer contributions.
Can I switch SIPP providers later?
Yes, SIPPs are portable via cash transfer or in-specie transfer.
Do I need financial advice?
Mandatory for defined benefit pension transfers over £30,000. For others, pension advice from an authorised financial adviser is wise to protect your retirement planning.
Transferring your pension to a SIPP can supercharge your retirement savings, but it’s not for everyone. Weigh the flexibility against the risks, double-check for safeguarded benefits, and don’t skip personal advice if you’re unsure. Ready to take control? Compare providers, crunch the numbers, and make your pension plan work for you.
