Pension charges are the fees taken from your pot to run and invest it, often a percentage each year, but the amount depends on the pension.
No single figure answers how much a pension costs, because pension charges differ by type of pension, by provider, by the funds chosen and by what you ask the provider to do. This guide explains the charges you may meet, which of them the law limits, and how to find out your own. Free, impartial guidance is available first from Pension Wise, the government-backed service from MoneyHelper. If you would rather have the costs of your own pensions set out by an FCA-authorised adviser, a minute or two on the form on this page starts that.
What pension charges are and who pays them
MoneyHelper says "Most defined contribution pension schemes charge fees to invest and manage your money. You usually won’t pay any charges if you have a defined benefit pension." This page is about defined contribution pensions: workplace schemes, personal pensions, stakeholder pensions and SIPPs. A final salary pension works differently, and the wider picture is in how the UK pension system works.
Charges usually leave quietly. MoneyHelper: "Your pension provider will usually take any charges out of your pension pot automatically, rather than send you a bill to pay." That makes them easy to overlook, and it matters because "Pension scheme charges are important to review as they can reduce how much you’ll have for retirement – even small differences over time can make a big difference."
The usual types of charge
MoneyHelper groups the charges on a defined contribution pension in three ways. This list does not cover every charge every provider makes.
- Running and managing the pension. "Most schemes have an annual management charge (AMC) to cover the cost of managing and investing your pension." You might also pay "an ongoing charge figure – to cover the costs of your provider running an investment fund", and "platform, policy, service or administration charges – to cover the admin costs of running your scheme, like an app so you can choose your own investments."
- Changing how it is invested. Fees "to cover the costs of buying and selling units in a fund", which the same page calls "transaction, entry and bid/offer spread fees", and "switching fees – to cover the costs of changing funds." If you pick your own investments, "you’ll often pay trading fees each time you buy and sell."
- One-off fees. A provider might charge for "transferring your money to a new scheme – often called an exit or transfer fee" or for "taking money from your pension when you retire." If you took financial advice when you set up the pension, "you might have agreed to pay your adviser using your pension fund."
Which of these apply to you depends on the pension and the provider. A provider's own documents say what it charges, and a later section shows how to find them.
How much does a pension cost each year?
Charges differ between a workplace scheme, a stakeholder pension and a SIPP with its own platform fees, so a single "market average" would hide the gap. What can be said is how the cost is built up and what the rules limit.
Mostly a percentage of your pot
MoneyHelper says the charges above "are often a fixed percentage of the amount you have in your pension, unless your provider decides to use a set amount – like £10 for the year." Percentage charges grow with the pot, while a fixed amount weighs more on a small one. Its worked example is an example and not a typical rate: "A 0.75% annual management charge means you’d pay 7.5p a year for every £10 in your pension. This works out at: £75 a year if your pension is worth £10,000; £225 a year if your pension is worth £30,000."
The structure can also change with the size of the pot. "Some providers will reduce their fees if your pension is above a certain amount", and some older schemes might "increase their fees if you stop your contributions". A single headline percentage may therefore not describe your pot.
Charges are not the only cost
Several costs sit outside a headline annual management charge: fund costs, dealing and switching costs, and anything paid to an adviser. The next sections take the capped part first, then the parts a cap does not reach.
The 0.75% cap: what it covers and what it does not
There is a legal limit on charges, but it is narrower than many people assume. It applies to the default fund of a workplace scheme used for automatic enrolment, and not to every pension.
Two rule sets carry the same 0.75% limit, split by the kind of scheme. For occupational pension schemes with money purchase benefits it is in regulation 6 of the Occupational Pension Schemes (Charges and Governance) Regulations 2015 (SI 2015/879) on legislation.gov.uk: "The limit in relation to a single charge structure is 0.75% annually of the value of the member's rights under the default arrangement." The regulation defines a single charge structure as one where the charges are "calculated solely by reference to the value of the member's rights under the scheme" (regulation 5). The same regulation sets limits for combination structures, including "£25 annually" for a flat fee and "2.5% of the contributions allocated under the default arrangement" for a charge on contributions, each paired with a limit on the percentage charged on the existing pot.
For a workplace personal pension, such as a group personal pension, the limit is in the FCA's rulebook instead. In COBS 19.6.6R the limit for a scheme using only an accrued rights charge is "0.75% of the value of those accrued rights". That section "applies to an operator of a qualifying scheme", and the FCA's glossary defines a qualifying scheme as "a personal pension scheme or stakeholder pension scheme, which provides money purchase benefits, used by an employer(s) to comply with duties imposed in Part 1, Chapter 1 of the Pensions Act 2008", the automatic enrolment duties; our guide to auto-enrolment explains them.
| Is it inside the 0.75% cap? | What the sources say |
|---|---|
| The default fund of a qualifying scheme used for automatic enrolment | Yes. Regulation 6 of SI 2015/879 limits it for an occupational scheme, and COBS 19.6.6R for a personal pension scheme. The regulation applies "to the extent of the value of that member's rights under a default arrangement". |
| Other funds in the same scheme, if you choose a fund that is not the default | Usually not: the cap is on the default arrangement, though regulation 3 can also treat a fund most members were required to choose as one. Check the scheme's documents. |
| Transaction costs | No. The regulations define "charges" as administration charges "other than" a list that starts with "transaction costs". |
| A personal pension or SIPP you opened yourself | The 0.75% limit is written for schemes an employer uses for automatic enrolment, so it is not the rule for a product you opened yourself. Whether such a product has a limit of its own is a question for its documents or the provider. |
So when you see charges are capped at 0.75%, the full sentence is narrower: charges on the default fund of a qualifying automatic enrolment scheme, as the regulations define "charges", with transaction costs measured separately. For stakeholder pensions, GOV.UK says stakeholder pensions are bound by government-set requirements that include charge limits; MoneyHelper's summary is a capped charge, low minimum payments and free transfers. How those work is in stakeholder pensions.
Costs outside the headline charge
Transaction costs
Buying and selling investments inside a fund costs money, and that cost is reported separately from the annual management charge. The FCA's rules for workplace pensions exist, in its words, "to enable governance bodies of workplace pension schemes to meet their obligations ... by obliging firms which hold the relevant information to calculate transaction costs to a common standard and provide that information, and information on administration charges, to governance bodies." The same section says the breakdown of identifiable transaction costs "should include at least taxes, explicit fees and charges, costs in connection with securities lending and borrowing, and the benefit from anti-dilution mechanisms." Those rules mostly bind firms and scheme governors, not members, so a member may need to ask the scheme or provider for the figures.
Early exit charges
An early exit charge is a fee for taking, converting or transferring benefits before a scheme's expected retirement date, and it is tightly limited: for personal and stakeholder pensions the FCA bars it for members who joined on or after 31 March 2017 and limits it to no more than 1% of the benefits for earlier joiners, and workplace schemes holding only money purchase benefits follow a parallel regime, with its own start date, under regulations 13A to 13C of SI 2015/879. Both regimes cover only a member who has reached normal minimum pension age (see when you can first take a pension). The rules and the dates are set out in pension transfer fees.
MoneyHelper still advises asking whether an existing scheme carries guarantees or special features, and whether leaving costs an exit fee or other penalty. The steps in how to transfer a pension. Whether an exit charge on an older plan outweighs a lower charge elsewhere is a sum for your own pots. An FCA-authorised adviser can run that sum once you complete the form on this page.
Paying for advice
An adviser's fee is separate from the provider's charges. MoneyHelper says a regulated adviser must tell you how much the advice will cost before you commit to anything, and that for advice on transferring a defined benefit pension the cost can often run to thousands of pounds. Fees differ by firm and by what you ask for.
SIPPs, drawdown and SSAS: where charges differ
SIPPs
MoneyHelper says a SIPP provider "will likely take charges from your pension pot to cover the cost of investing. This normally includes an annual management fee and charges if you want to change your investments." It adds that "The main differences between SIPP providers are their charges and the range of investments they offer, so always shop around before choosing a product," and that "Typically, ‘low cost SIPPs’ will offer fewer investment options and ‘full SIPPs’ will offer more complicated investment options with higher charges."
That is a description of the range, not a league table. Which SIPP is cheapest depends on the size of your pot, how often you trade and what you hold, and a comparison needs each firm's current charges sheet. Each firm's own charges are covered on its page: Hargreaves Lansdown, Vanguard, Fidelity and Interactive Investor. How the SIPP itself works is in what a SIPP is, and choosing between them in choosing a SIPP provider.
Drawdown
Drawdown is a way of taking a pension, covered in how pension drawdown works, and the pot stays invested while you draw on it. MoneyHelper's drawdown page ties the worth of a drawdown pot to contributions, investment performance and the provider's deductions. It also says providers differ: some charge higher fees or set minimum amounts you must put into drawdown, and comparison sites for pension providers do not exist. The cost of drawdown is the provider's charges for the plan plus the cost of the investments, and a provider can charge for taking money (see the one-off fees above). Drawdown is a decision about income, tax and how long the money must last, which comparing drawdown providers and your options at retirement look at.
The value of investments can fall as well as rise, and you may get back less than was paid in. A drawdown pot stays exposed to market movement, up or down, until the money is taken.
SSAS
A small self-administered scheme is a different structure from a SIPP, covered in SIPP or SSAS and SSAS providers. Ask a provider or administrator for a written schedule of set-up, annual and per-transaction charges before comparing.
How to find out what your own pension costs
The simplest answer is in your own paperwork.
- Ask for the charges, in writing. MoneyHelper says "your pension provider should explain how all their charges work and how much they are." Ask for the annual management charge, any fund charge, platform or policy fees, switching and dealing fees, and any exit or transfer fee.
- Find the investment funds you hold. A fund's ongoing charge sits on top of the provider's charge, and a default fund and a fund you chose yourself can be charged differently.
- Check whether any guarantee or special feature is attached. MoneyHelper warns that your provider might offer "a guaranteed retirement income (such as an annuity) at a higher rate than you could get elsewhere", and that switching could lose it. Charges are one factor among several.
- Ask for the transaction cost figures if the scheme is a workplace scheme; the FCA's rules oblige firms holding the information to supply it to the governance body.
MoneyHelper says "Charges vary between pension providers, so it’s worth comparing your provider’s charges to others on the market" and that "Even a slightly lower fee can make a big difference to your pension’s value, especially if your pension will remain invested for many years." Its guide also says workplace and stakeholder pensions "are usually cheaper than personal pensions you can set up yourself", and that "pension charges have been reducing over time, so older schemes might have higher charges than new schemes." If you are comparing a particular workplace or personal pension, the provider pages cover Nest, The People's Pension, Aviva, Standard Life, Legal & General and PensionBee.
A lower charge is not the whole story. If you have several pensions, MoneyHelper notes you "typically pay charges to each pension provider", which is one reason people look at combining them, but that can lose valuable features. Charges, guarantees, tax and your plans for each pot can be weighed in one conversation with an FCA-authorised adviser, and the form on this page will put you in touch with one.
Pension charges: questions people ask
How are pension charges calculated?
Often as a percentage of the value of the pot each year, sometimes as a set amount, and sometimes as both. MoneyHelper's own example is that "A 0.75% annual management charge means you’d pay 7.5p a year for every £10 in your pension." Whether the percentage is applied to the whole pot or in bands depends on the provider.
What is the difference between an annual management charge and an ongoing charge figure?
MoneyHelper describes the annual management charge as covering "the cost of managing and investing your pension" and the ongoing charge figure as covering "the costs of your provider running an investment fund". Both can apply to the same pot, and the page for your provider's plan should show both.
Is there a SIPP with no fees or charges at all?
Expect charges of some kind. MoneyHelper says a SIPP provider "will likely take charges from your pension pot to cover the cost of investing". A provider that advertises a free account may still have fund charges, trading fees or fees for taking money out, so ask for the full charges in writing.
Which SIPP or pension provider is cheapest?
The answer changes with the size of the pot, the funds and how often you trade, and charges are only one factor; see the notes on choosing a SIPP and choosing a personal pension.
How much does it cost to set up a private pension?
It depends on the provider. The charges listed above include the annual management charge and platform or policy fees; ask the provider whether there is a set-up fee and what the first-year cost would be.
Can I avoid charges by moving my pension?
Moving may lower the charges on the new plan, which can matter over many years, but you can also lose guarantees or protections, and the old scheme may charge an exit fee; for personal and stakeholder pensions, early exit charges on members past normal minimum pension age are limited as explained above. Read how to transfer a pension first. Free, impartial guidance is available from Pension Wise.
Your next step
Pension charges are only worth comparing alongside what you would give up or gain: guarantees, investment choice, tax and when you want income. To see how they stack up against your own pots, use the form on this page; an FCA-authorised adviser will then get in touch to talk it through, and the enquiry itself costs nothing.
Sources: legislation.gov.uk, SI 2015/879 regulations 2 to 6; FCA Handbook, COBS 19.6, 19.6A and 19.8, and Glossary; MoneyHelper, Pension scheme fees and charges explained, Self-invested personal pensions, What is pension drawdown? and Should I transfer or combine my pensions? (archived copies read 17 October 2026); GOV.UK, Personal pensions: your rights.