Comparison · Pensions · 2026
DC Pension Transfer vs Preserved Benefits UK 2026: Should You Move an Old Pension?
If you have left a job with a defined contribution (DC) workplace pension, you usually have two choices: leave it preserved (deferred) where it is, or transfer it into a new scheme. The right answer depends on charges, guarantees and how many other pots you are juggling. This guide compares both routes with 2026 figures.
TL;DR -- 30-Second Summary
- • No advice required to transfer a standard DC pot (unlike safeguarded/DB benefits over £30,000)
- • Check for a Guaranteed Annuity Rate before transferring — these are usually worth keeping
- • Exit charges capped at 1% for over-55s on personal/stakeholder pensions since March 2017
- • Consolidation can cut charges from 1%-1.5% AMC down to 0.15%-0.75% on a modern SIPP
- • Pots of £10,000 or less may qualify for small-pot rules that avoid the Money Purchase Annual Allowance trigger
Side-by-Side Comparison
| Feature | Transfer to new scheme | Leave preserved |
|---|---|---|
| Ongoing charges | Often lower on a modern SIPP/personal pension | Fixed at old scheme rate, sometimes 1%-1.5% |
| Guaranteed Annuity Rate | Lost permanently on transfer | Preserved and can still be used |
| Investment choice | Usually wider (SIPP fund range) | Limited to old scheme's fund list |
| Administration | One statement, easier drawdown planning | Extra statement/provider to track |
| Exit charge | Capped at 1% for over-55s (nil for post-March 2017 contracts) | |
| Advice requirement | None for standard DC; mandatory for safeguarded benefits over £30,000 | |
Worked Example: A £50,000 Pot Over 20 Years
Suppose an old workplace pension holds £50,000 and charges a 1.4% annual management charge (AMC), while a modern SIPP or personal pension charges 0.5%. Assuming 5% annual growth before charges and no further contributions, the charge difference alone compounds significantly over 20 years.
| Measure | Old scheme (1.4% AMC) | New SIPP (0.5% AMC) |
|---|---|---|
| Starting pot | £50,000 | £50,000 |
| Net growth rate (5% minus AMC) | 3.6% | 4.5% |
| Approx. pot after 20 years | about £101,000 | about £120,000 |
| Difference from lower charges | about £19,000, before checking for any GAR or guarantee given up | |
A 0.9 percentage point charge saving is worth roughly £19,000 on this example over 20 years — but that saving only makes sense if the old pot does not carry a valuable guarantee. Always request a benefits statement from the current provider and ask specifically whether a Guaranteed Annuity Rate or other safeguarded benefit applies before transferring.
When Transferring Wins
Transferring makes sense when the old scheme has no GAR or other guarantee, charges are noticeably higher than a modern alternative, the fund range is limited or poor value, and you are trying to consolidate several small pots ahead of retirement planning. A single, well-invested SIPP or personal pension is usually easier to manage into and through drawdown than five separate deferred pots with five separate login details.
When Leaving It Preserved Wins
Leaving a pot preserved wins whenever it carries a Guaranteed Annuity Rate, a with-profits guarantee, or any other safeguarded benefit — these are typically impossible to replace elsewhere and are often worth far more than a small charge saving. It can also make sense if the pot is small enough to fall under the small-pots rule at retirement, or if the scheme offers a fund range or feature (such as a lower-cost annuity guarantee) not available elsewhere.
Get free guidance from MoneyHelper's Pension Wise service if you are 50 or over before making a final decision, and take regulated advice if the transfer involves safeguarded benefits worth more than £30,000 — this is a legal requirement, not just good practice.