How much does defined benefit pension transfer advice cost?
Defined benefit transfer advice is specialist work. The useful comparison is the full advice cost, what it includes and whether the adviser has the required permission and experience.
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When is regulated advice mandatory?
MoneyHelper states that if safeguarded defined benefit pension benefits are worth more than £30,000, financial advice is required before transferring to a defined contribution arrangement.
Why can the advice be expensive?
The adviser has to understand the scheme benefits, your wider financial position and the consequences of giving up guaranteed income. The FCA describes this as complex specialist advice.
Ask exactly what the quote covers
Compare whether the quoted fee covers initial triage or abridged advice, full transfer advice, implementation and any ongoing service after the decision.
You are paying for the advice, not for a transfer recommendation
A proper advice process can conclude that staying in the defined benefit scheme is suitable. Do not choose a firm because it appears more willing to recommend a transfer.
Understand the work behind the quote
Transfer advice assesses whether giving up safeguarded pension benefits is suitable in your circumstances. It can require detailed scheme information, household analysis, specialist calculations and consideration of the proposed destination. A generic investment-review price may not cover that work.
Ask the firm to separate the transfer assessment, any preliminary or abridged service, implementation and advice on the receiving arrangement. Find out which legal entity performs each part and which permissions it holds. If several firms are involved, request a combined account of the costs and responsibilities.
The FCA's starting position is that most people are better off retaining a defined benefit pension. You are paying for an assessment, not for permission to transfer or a favourable conclusion.
Ask what you pay for each possible outcome
Request the total if the recommendation is to remain in the scheme, and the total if a transfer is recommended and implemented. Ask how the charging arrangement complies with the rules for this work; do not assume the fee disappears when a transfer does not happen.
If a preliminary service is offered, ask what conclusions it can reach and what additional work would be needed for full advice. A lower initial figure may cover a narrower stage rather than an equivalent assessment. Confirm whether any earlier fee is credited towards later work.
For illustration, comparing a fixed full-advice quote with a low-cost preliminary appointment would be misleading. List the stages covered, the information reviewed and the output before comparing amounts. Obtain all figures in writing before agreeing to a charge.
Include the consequences after a transfer
Where a transfer is recommended, the receiving pension can involve platform, fund, investment-management and ongoing advice charges. Those future costs are distinct from the transfer-advice fee and need to be understood as part of the recommendation.
Ask what happens if the scheme quote expires, new facts emerge or you decline to implement. The agreement should explain further work and charges. Keep time for questions rather than allowing an expiry date to force acceptance.
A substantial advice bill is not proof that a transfer is suitable, and a low fee is not proof that the assessment is inadequate. Verify the firm, understand the scope and evaluate the reasons in the report. If the conclusion is to stay, the completed assessment may still have answered a significant retirement question.
Sources and further reading
MoneyHelper - Transferring a defined benefit pension ↗
FCA - Pension transfer advice: what to expect ↗
