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How to get retirement and pension advice

Find out how to get professional pension advice, why you might need it and how much pension advice costs.

In this article
Why should I get advice on pension? When should I get pension advice? Is financial advice mandatory for pensions? Where should I go for pension advice?
How will I be charged for pension advice? How much does pension advice cost? How can I afford to pay for pension advice?

Why should I get advice on pension?

Pensions have arguably become more complicated over the last few years with various ways to access your money and greater personal responsibility in making your savings last.

Seeking advice or guidance can often be a good idea as you approach retirement. But how much does it cost? And where can you get advice you can trust?

This guide outlines the different pension advice services available and highlights how much you might be charged to plan your retirement with an adviser.


When should I get pension advice?

General retirement issues

People are increasingly seeking out advice to help them make their general retirement decisions following the introduction of the pension freedoms in 2015.

If you need help in choosing a pension, or reviewing your retirement options, an independent financial adviser (IFA) may be able to help.

IFAs are authorised to give you advice and recommend suitable pensions products and investment options.

Many advisers will offer ongoing reviews to ensure that your finances stay on track throughout your retirement.

Arranging pension drawdown

An increasing number of people are opting for pension or income drawdown at retirement.

Your retirement savings remain invested in funds specifically designed and managed for this purpose, and you might need some assistance if you have limited experience of investments.

Many pension providers will require you to get independent financial advice before they’ll accept you as a new pension drawdown customer and some will expect the same of existing customers.

Getting financial advice before drawdown is important as it will help you to identify providers who might offer you the product you require.

You'll find out more about how much they will charge you and the pros and cons of making such a transfer based on your own personal circumstances.

Is financial advice mandatory for pensions?

Since 2015, there has been a legal requirement that transfers from defined benefit or final salary pensions worth more than £30,000 need to be signed off by a financial adviser.

This rule is there to protect you and make sure you’re aware of all the pros and cons of transferring.

There's an advantage in this, because if things do go badly following poor advice about a transfer, you’ll be able to use the complaints and compensation schemes available.

There have been some high-profile examples of people transferring out of defined benefit schemes following unsuitable advice.

The Work & Pensions Committee has proposed that advisers continue to start from the presumption that a final salary pension transfer is a ‘bad idea’ for their client.

Seeking the help of a reputable adviser is essential if you’re considering giving up the substantial benefits and guaranteed income offered by a final salary scheme.

Where should I go for pension advice?

An independent financial adviser

For complex products, such as pensions and investments, getting expert advice can be crucial, so that you don't end up with something unsuitable. That's where a financial adviser comes in.

Many financial advisers will offer you an initial meeting, free of charge.

These meetings can be useful to help you decide whether they can provide you with the services that you need and, that you will be happy to work with them.

A financial adviser can scour the market to find products that are tailored to your circumstances, and help you personally plan for the things you want to do with your money in the future.

If the adviser is a ‘tied’ or ‘restricted’ adviser, they can only offer you products from one product provider, or a small number of providers.

Financial advisers are regulated by the Financial Conduct Authority (FCA) and have a strict code of conduct and rules to stick to.

Find out more in our guide to how to find a financial adviser.

Guidance services

If you're looking for more general information - sometimes called 'guidance' without recommendations or ‘personalised guidance’, there are a few options - particularly if you are planning your retirement.

These services are free and provided by the government, although there are plans to merge them into a single guidance body:

  • Pension Wise - set up when the pension freedoms were introduced, you can speak to someone over the phone or face to face to understand your pension options
  • The Pensions Advisory Service - an independent organisation funded by the government that can answer your pension questions
  • The Money Helper service – a service set up by the government to offer impartial money guidance on all financial areas

How will I be charged for pension advice?

Financial advisers will have different ways of charging for their services.

Advisers must agree up front how much you will be charged for their services, when you'll be charged and how payments will be made to them. There are three main ways you will be charged. 

Flat fees

A one-off charge that covers everything from the fact find to the plan implementation. Tailored to your needs, but could vary wildly from adviser to adviser.

You could be charged an initial fee for the recommendations and then a flat fee annually for reviews or each piece of work your adviser undertakes.

Hourly fees

Simple and easily evidenced, but beware, as this method may be less of an incentive for the adviser to work quickly.

You could expect to pay anything between £50 and £250 per hour.

Proportion of the money you want to invest

This is a percentage of your assets. You could be charged an initial fee, usually ranging between 1% and 4%, and an ongoing, annual charge between 0.5% and 1.5%.

Note that if you have a smaller amount to invest, an adviser who uses this method of charging might be reluctant to take you on, as they might feel the amount of revenue they would generate might not justify the cost of offering you their service.

Find out more in our guide to how much financial advice costs.

How much does pension advice cost?

In May 2018, Which? surveyed more than 100 IFAs to find out how they charge clients.

Some 79% of firms charge up-front percentage fees based on the amount invested, 71% apply upfront fixed fees and 53% have a standard hourly rate.

We also asked them to quote us on a range of retirement-related scenarios. 

Pension advice about converting a £100,000 pot into retirement income costs an average of £1,837 or 1.84% of the fund value.

Combining pension pots worth £150,000 and opening a Sipp incurs average fees of £2,897.

The average and highest rates for our scenarios are in the table below.

Scenario Average rate Highest rate
Advice prior to retirement about turning a pension pot
worth £100,000 into a retirement income
£1,837 £4,000
Advice about transferring multiple pension pots worth
£150,000 to a Sipp
£2,897 £6,000
Advice about taking a 25% lump sum from a £150,000
pension pot and then entering a flexible drawdown plan
to provide an income over retirement
£2,383 £4,500

How can I afford to pay for pension advice?

The cost of financial advice on your pension can run into thousands of pounds. 

Recognising this, the pensions industry has created some alternative ways to fund the cost of pension advice without you having to find a large lump sum up front. 

The pension advice allowance

Introduced in April 2017, the pension advice allowance lets you withdraw up to £500 from your pension savings to put towards the cost of retirement and pensions advice.

This £500 allowance can be used three times, so you can access retirement advice at different stages of your life. You may, for example want advice when choosing a pension, and again when you’re deciding what to do with your savings.

However, you can only use one of your three withdrawals per tax year.

The good news is that you won’t be charged any tax on your withdrawal, provided you use it to pay for financial advice.

The pension advice allowance is available at any age, but can only be used by people who have a defined contribution pension.

The scheme is not available for those that have a defined benefit, or final salary, pension.

Employer-funded advice

Companies can offer to pay for financial advice for their employees without paying income tax.

This tax-exemption has always existed – but has been increased since April 2017 from £150 to £500.

In combination with the pension advice allowance, this means you could get £1,000 towards paying for pension or retirement advice.