Should you do a partial pension transfer to a SIPP?

Key takeaways

• A partial transfer of your workplace pension to a SIPP can give you more flexibility, while helping you test out a new provider before fully committing.
• There are pros and cons to consider: transferring pensions can provide better investment choices and lower fees, but you may lose out on valuable benefits or be charged exit fees.
• Not all pension schemes allow partial transfers. So make sure to check with your current provider first.
• Freetrade offers a streamlined process for pension transfers with no transfer-in fees.

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If you're thinking of moving part of your workplace pension into a self-invested personal pension (SIPP), this guide will help you weigh the pros and cons, understand the rules, and walk you through the steps, should you decide it’s the right move for you.

A partial transfer means moving only part of your existing pension into a new provider, rather than the full amount. It can be a useful way to test the waters before committing more of your pension pot.

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Considering a partial transfer of your workplace pension to a SIPP?

Before making any decisions about moving your pension pots, it's important to understand the different types of pension available in the UK. 

What is a workplace pension?

First, a workplace pension is a savings plan set up by your employer to help you save for retirement. UK employers have to provide you with a pension scheme, and make contributions to it too. These schemes come in two main types:

Defined benefit (DB) pension schemes

A defined benefit pension is a type of workplace pension that promises a guaranteed income in retirement. The amount you receive is usually based on your final salary and how long you worked at the company. Only your employer contributes to this pension plan on your behalf. You don’t need to.

Defined contribution (DC) pension schemes

Both you and your employer contribute to this pension pot. The amount available to you in your retirement will depend on what’s put in, as well as the investment returns. 

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What is a SIPP?

A SIPP, on the other hand, is managed by you. It can offer you greater control over your pension savings, because it puts you in charge. Unlike workplace schemes where investment choices may be limited by your pension provider and fund manager, a SIPP allows you to make your own choices from a wide range of investments, including:

• Stocks and shares from companies listed on major exchanges
• Exchange-traded funds (ETFs) which are a collection of investments, pooled into one
• Investment trusts across various sectors and markets
• Real estate investment trusts (REITS) for investing in property
• Government securities like UK Treasury bills

This flexibility lets you align your pension investments with your personal financial goals and risk tolerance.

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What types of pensions can I transfer to a SIPP?

In theory, you can transfer a defined benefit plan or a defined contribution plan to a SIPP, as long as it's a registered pension scheme with HM Revenue & Customs. However, you’ll want to make sure that the place you are transferring it to (known as the ‘receiving scheme’) will accept your transfer. Some receiving schemes don’t accept certain pension plans.

Transferring defined benefit pension plans

Transferring out of a defined benefit scheme requires careful consideration. DB pensions offer a guaranteed income for life. Often, they’ll also include benefits like inflation protection or benefits for your spouse.

Because of the valuable guarantees they offer, the UK’s Pension Schemes Act requires that you seek out independent financial advice if your defined benefit pension is worth more than £30,000. Many SIPP providers, including Freetrade, do not accept transfers from defined benefit schemes because of their complex nature and the potential loss of valuable benefits to you.

Defined contribution pension plans

Defined contribution plans are generally much more straightforward to transfer, either in their full amount, or partially. Common types of DC plans that can be transferred to a SIPP include:

• Individual Personal Pensions (IPPs)
• Stakeholder Pension Plans (SHPs)
• Free Standing Additional Voluntary Contributions (FSAVC)
• Trust-Based Workplace Pension Plans (subject to plan rules)
• Other SIPPs

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Should I transfer my pension? 

Now that we’ve covered the meat and potatoes of UK pensions, we can dive into the pros and cons of transferring to a SIPP.

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Should I transfer a part of my pension?

With those potential benefits and consequences of a pension transfer, you might decide that a partial transfer would be a good middle ground for your financial objectives and personal preferences. 

This way, you can test the waters before committing your entire pension to a new SIPP provider. You also might be able to retain certain benefits from your workplace pension, and you get to balance your degree of responsibility: retaining some of your pension with a fund manager, while managing the rest yourself. 

To summarise, if you’re asking yourself, “Can I transfer my pension?”, the answer is yes. There can also be a range of upsides in doing so. However, there are key considerations to make before deciding to proceed.  First, if you only transfer a portion of your pension, then you will have multiple pensions to keep an eye on. This can require more administrative work for you, and it might mean paying more fees. Second, it can complicate your tax planning for retirement, so it can be worth seeking professional financial guidance before you do. 

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How do I transfer my pension to a SIPP?

If you've decided a partial transfer is right for you, here's how to do it with Freetrade:

Step 1

If you haven’t already, open your Freetrade account, and then open a SIPP account. You'll need to provide some personal information, such as your National Insurance (NI) number.

Step 2

You can submit your pension transfer request either on the web, or via the app. You'll then be asked to provide details about the pension you wish to transfer, including:

• Your pension provider's name and address
• Your pension plan reference number
• Whether you’d like a full or partial transfer
• How much (in £ or %) you wish to transfer

Step 3 

Once you confirm and submit your transfer request, Freetrade will handle the rest with your current provider. You can track the progress of your transfer in the app, with most transfers completing within eight weeks. We’ll let you know once the transfer is complete.

Don’t forget that for a limited time, you can get 3% cashback when you transfer a pension to Freetrade. Offer ends 31 August 2025. Terms apply.

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Important information