A clear, step-by-step guide to overseas pension transfers, explaining how the process works, what should and should not cost money, and how to identify potential risks. This article helps you understand when advice is required, what questions to ask, and how to avoid costly mistakes or scams when considering transferring a UK pension.
The question of whether to transfer a UK pension into another arrangement arises more frequently when you’re living abroad.
In some circumstances a transfer may provide flexibility, access to different investment options or help align retirement income with life in another country.
In many other situations, remaining in the original pension scheme may offer stronger long-term security, particularly where the pension provides guaranteed benefits.
UK defined benefit pensions, sometimes referred to as final salary pensions, provide a guaranteed income for life and are considered among the most valuable retirement benefits available. Because of this, the UK regulator takes a cautious approach to pension transfers.
Financial advisers must begin their assessment from the position that transferring out of such a scheme is unlikely to be in the member’s best interests unless clear evidence suggests otherwise.
Despite this, people living outside the UK are frequently approached about reviewing or transferring their pensions. The international nature of expatriate financial planning, combined with unfamiliarity with UK regulation, can make it difficult to understand how the process should work and which services should legitimately carry a cost.
This guide explains the typical stages involved in a UK pension transfer, what services are usually free and which require formal advice and what questions individuals should ask before proceeding.
Understanding these steps can help people distinguish between regulated advice and marketing activity, and ensure that decisions about retirement savings are made with appropriate information and transparency.
Please be aware that this guide contains a lot of information, but it contains what you need to know to avoid making an unnecessary and expensive pension transfer.
This article is provided for general information purposes only and does not constitute financial advice. Pension transfers are complex decisions that depend on individual circumstances, including retirement goals, tax position, health, investment risk tolerance and the specific terms of the pension scheme involved.
In the UK, transferring a pension with safeguarded benefits valued above £30,000 requires advice from a financial adviser authorised by the Financial Conduct Authority with permission to advise on pension transfers.
The information provided here is intended to explain how the process typically works and the types of costs that may arise. It should not be relied upon as a recommendation to transfer or retain any pension arrangement. Anyone considering transferring a pension should seek personalised advice from a suitably authorised professional before making any decisions.
Most advisers offer an initial conversation at no cost. The purpose is simply to determine whether further analysis is appropriate. This conversation typically covers:
Once an adviser believes a full review may be appropriate, the next step is typically a fact-finding stage. This involves collecting the information required to determine whether a formal pension transfer analysis should proceed.
At this stage the adviser will usually request:
Advisers regulated by the Financial Conduct Authority are also required to carry out identity verification and anti-money laundering (AML) checks before establishing a formal client relationship. This normally involves confirming identity and address details and may be completed electronically.
Producing a full pension transfer analysis requires significant time and regulatory oversight. For this reason, firms will normally explain their advice fees and engagement process before the analysis begins.
Many firms require a commitment to paid advice at this stage and some may request a deposit before starting the detailed work. While the full advice fee is often paid once the report is delivered, requesting a deposit is not unusual because producing the report involves both time and professional liability.
In some cases this stage may still be free if the adviser is simply gathering preliminary information. However, clients should always have a clear understanding of the fees involved before progressing to formal analysis.
If fees have not been discussed by the time detailed information is being requested, or if the adviser is reluctant to explain how they will be paid, this should be treated with caution. Transparent fee disclosure is an important part of regulated financial advice.
This is the core regulated advice stage.
For defined benefit pensions or pensions with safeguarded benefits above £30,000, UK law requires advice from an authorised adviser with the correct permissions.
The analysis normally involves:
The result must be a formal written suitability report.
Typical market fees for this advice often fall in the range of £3,000 to £7,500 for straightforward cases.
Government-backed guidance notes that DB transfer advice may cost “thousands of pounds”.
Importantly, due to FCA rules introduced in 2020, advisers usually must charge whether the recommendation is to transfer or not.
After analysis, the adviser must give a clear recommendation:
The regulatory starting assumption is that remaining in the scheme is likely to be in the client’s best interests unless proven otherwise.
The recommendation must be documented and signed by a Pension Transfer Specialist who is on the FCA Register.
If the recommendation is to transfer and the client decides to proceed, the next stage is the implementation of the transfer itself. This involves moving the pension from the existing scheme into the new receiving arrangement.
Before anything can happen, the client must formally authorise the adviser or provider to act on their behalf.
The first step is usually signing a Letter of Authority (LOA).
This document allows the adviser to:
An LOA does not authorise the transfer itself. It simply allows the adviser to obtain the information required to progress the process.
Once the client has reviewed the recommendation and decided to proceed, a transfer authority form is completed.
This authorises the existing pension scheme to transfer the funds to the receiving pension provider.
The client will normally need to confirm:
Some schemes may also require additional confirmation to ensure the transfer is not linked to a pension scam.
Before the transfer can take place, the receiving pension scheme must be established.
This may involve opening:
During this stage the investment structure may also be prepared so that funds can be invested once the transfer completes.
Once all documentation is complete, the existing scheme processes the transfer.
Timescales vary depending on the scheme and complexity of the case, but transfers often take several weeks to a few months to complete.
During this period:
Once the funds arrive in the new pension arrangement, the investments recommended in the advice report can be implemented.
If the recommendation is to transfer and the client proceeds, additional costs may apply.
These may include:
Some advisers charge for arranging the transfer and setting up the receiving pension.
This is normally either a fixed fee or a percentage of the transfer value. Typical ranges seen in adviser fee disclosures are often around 1–2% of the transfer value and are sometimes capped for large pensions.
If the transferred pension will be invested, the adviser may charge ongoing advice fees.
Common structures include:
These are separate from the transfer advice itself.
Consumers should generally expect the following to be free or low-cost:
Anything beyond this usually requires formal advice and therefore carries a fee.
Certain behaviours should prompt caution.
In the UK, it is illegal for companies to make unsolicited cold calls about pensions, but this is not the case once you live abroad.
If someone contacts you unexpectedly offering a pension review, transfer opportunity or investment linked to your pension, this should be treated with extreme caution as they have no insight into your pension scheme and do not know your financial situation.
Pension decisions should only be made after careful analysis and regulated advice. Legitimate advisers rarely approach individuals out of the blue about transferring their pension.
Anyone receiving an unexpected call, message or email about their pension should take time to verify the firm involved and check whether they are authorised by the Financial Conduct Authority before sharing any personal information or documents.
Defined benefit pensions provide guaranteed income for life. If someone claims the transfer will definitely produce higher returns, that is misleading.
Pension decisions should never be rushed. High-pressure tactics are a common feature of pension scams.
People living abroad are often approached by firms that say they are “on the FCA register” or “regulated in the UK”. This statement can be misleading if the company you are speaking to is not actually authorised to provide pension transfer advice.
Only firms authorised by the Financial Conduct Authority with the correct permissions can advise on transferring UK pensions with safeguarded benefits.
In some cases, overseas firms market pension reviews or retirement planning services while relying on a separate UK authorised firm to provide the formal transfer advice. If this is the case, it should be made clear which firm is responsible for the regulated advice and who will produce the suitability report.
Before proceeding, it is sensible to confirm:
If this information is unclear, or the firm is reluctant to explain their regulatory status, it should be treated with caution.
In some cases, people speaking to an overseas adviser or pension consultancy may be introduced to a UK firm authorised by the Financial Conduct Authority to provide the required pension transfer advice.
After reviewing the pension, the authorised adviser may recommend not transferring. This is not unusual, as the regulatory starting point for defined benefit pensions is that remaining in the scheme is often in the client’s best interests.
However, caution is warranted if another party involved in the process continues to encourage a transfer despite the regulated recommendation being not to proceed.
Only the FCA-authorised firm providing the suitability report is responsible for the pension transfer advice. If another adviser or consultancy suggests ignoring that recommendation, it raises important questions about where the advice is actually coming from and whether the client’s interests are being properly prioritised.
Where advice and encouragement from different parties appear to conflict, it may be sensible to pause the process and seek clarification or a second opinion before making a decision.
Following regulatory changes, most advisers cannot offer DB transfer advice entirely free because they must charge regardless of the outcome. If someone claims the advice is free but charges only if the transfer proceeds, it may breach FCA charging rules.
Anyone considering a pension transfer should ask:
Clear answers to these questions help confirm whether the process is transparent and compliant.
Some people expect financial advice to be charged on an hourly basis, similar to a solicitor or accountant. In practice, pension transfer advice is usually charged as a fixed fee or sometimes as a percentage of the pension value.
Producing a pension transfer recommendation involves detailed analysis and a formal suitability report explaining whether transferring is in the client’s best interests. Advisers must also operate within strict regulatory requirements set by the Financial Conduct Authority and take responsibility for the advice they provide.
Behind the scenes, a number of costs contribute to producing a pension transfer report, including:
Because the potential financial consequences increase as pension values rise, the risk and responsibility associated with the advice also increases. For this reason, some firms structure their fees as a percentage of the pension value, often with minimum and maximum limits.
Many advisers will also decline to analyse smaller pensions because the cost of producing the report can approach or exceed any potential benefit from transferring.
For that reason, below a certain pension value it may simply not make financial sense to transfer once advice and implementation costs are taken into account.
As with any financial service, the most important factor is transparency. Clients should always understand how advice fees are structured before agreeing to proceed.
Not every pension needs a full transfer analysis and in many cases the right outcome may be to leave the pension where it is. However, there are situations where speaking to an independent, regulated adviser can be helpful.
You may want to seek advice if you:
A regulated adviser can explain your options, outline the likely costs involved and confirm whether a full transfer analysis is appropriate before any commitment is made.
Experts for Expats introduces you to carefully selected, independent advisers who are authorised by the Financial Conduct Authority to provide pension transfer advice where required.
Our partner’s role is to help you:
There is no cost to be introduced and the adviser will explain any fees before you decide whether to proceed.
If you are unsure whether a pension transfer is worth exploring, or you would like an independent view before taking the next step, you can request an introduction and speak to a specialist who understands both UK pensions and the challenges of living abroad.
