Some older personal pensions can look perfectly serviceable on an annual statement while still delivering less value than a newer alternative.

That’s the concern raised by the Financial Conduct Authority after reviewing insurance-based pensions and savings products that are no longer sold to new customers. Higher or complicated charges are part of the problem, but so are outdated investment options, limited servicing and incomplete provider data.

For savers, this isn’t a reason to transfer an old pension automatically. Some legacy contracts include guarantees or other valuable terms that can’t be replaced. The sensible question is whether the benefits justify the costs and restrictions attached to the policy.

Which pensions are covered by the FCA’s review?

The review focused on unit-linked non-workplace pensions and savings products offered by life insurance companies.

A unit-linked pension invests contributions in one or more pooled funds. The value of the policy changes according to the value of the units held, after allowing for charges. These arrangements include many older personal pensions, self-invested personal pensions, drawdown contracts, investment bonds and endowment-style savings products.

The FCA didn’t review every kind of pension. Workplace pensions were outside its scope because they already have additional governance and charge-cap arrangements. With-profits policies, unit-linked annuities and reviewable whole-of-life policies were also excluded.

This distinction matters because the findings don’t mean that every older pension is poor value. They indicate that legacy unit-linked products are more likely than newer products to combine higher costs, weaker investment outcomes and fewer service features.

What does “legacy pension” mean in practice?

A legacy pension is generally an older product that has been closed to new customers.

The existing policy continues, and the saver may still be able to contribute, switch funds or take benefits under its terms. The provider simply no longer markets that particular product to new investors.

These pensions often sit on old administration systems and may have been designed when charging conventions, technology and customer expectations were very different.

The FCA found hundreds of closed product variants and thousands of unit-linked fund variants across the market. Around half of the policies in its sample were held in legacy or closed products.

A closed product isn’t automatically defective. The difficulty is that complexity can make it harder for the provider and the customer to understand the total cost, the investment outcome and the value of any remaining contractual benefits.

What the FCA found

The regulator collected information from life insurers covering around 90% of policies in the relevant market. Unit-linked non-workplace pensions and savings account for approximately 17 million policies and £500 billion of assets.

It found examples of good practice, but also several recurring weaknesses.

Older products were more likely to have:

• multiple layers of product, fund and historic commission charges
• higher aggregate costs than comparable modern arrangements
• poorer investment returns
• fewer online and servicing features
• investment funds selected many years ago that may no longer meet current needs
• incomplete or inconsistent data about policy terms and customer outcomes

Most participating firms acknowledged that some customers in legacy products were likely to receive poorer value than customers in comparable products that remain open to new business.

Why small pension charges can make a large difference

Charges reduce the amount of money remaining invested. That means the saver loses both the charge itself and the future growth that money might otherwise have earned.

Consider two pensions starting with £100,000 and growing by 5% a year before charges.

If one costs 0.5% a year and the other costs 1.5%, the approximate values after 20 years would be:

This is a simplified illustration rather than a forecast. Real returns vary, charges may be deducted in different ways and some policies include fixed fees or other adjustments.

It does show why an apparently modest annual difference can become commercially significant over a long saving period.

Fixed charges deserve particular attention where the pension pot is small. A £100 annual fee represents 0.1% of a £100,000 fund but 2% of a £5,000 fund before any percentage-based charges are added.

The FCA found examples of providers removing fixed fees where there was a risk that charges would steadily erode smaller pension pots.

Does a higher charge always mean poor value?

No. Price is only one part of value.

An older pension may include benefits that are expensive or impossible to reproduce elsewhere. Examples can include:

• guaranteed annuity rates
• guaranteed minimum growth or maturity values
• protected tax-free cash
• enhanced life cover or waiver benefits
• valuable early retirement terms
• favourable charges applying at particular policy dates

A guaranteed annuity rate can be particularly important. It may allow the pension fund to buy a substantially higher secure income than would otherwise be available on the open market.

The regulator expects firms to understand the value of these features rather than assessing an old pension on charges alone. It found examples of providers analysing how customers used guarantees and developing ways to preserve valuable benefits while giving them access to lower costs or better servicing.

A cheaper pension is not better value if obtaining it means surrendering a guarantee worth more than the future charge saving.

“My provider still accepts contributions, so can the pension really be outdated?”

Yes. A policy can remain operational long after the provider stops offering it to new customers.

Accepting contributions doesn’t confirm that its charges, funds or service remain competitive. Nor does it mean the original investment selection is still suitable.

Some legacy funds were chosen decades ago. Their objectives, risk characteristics and investment structure may not reflect the saver’s present circumstances or the way markets now operate. The FCA found that customers often remained invested in old funds even where similar or better alternatives were available.

The relevant test is the current outcome, not simply whether the contract still functions.

The data problem behind older pensions

One of the review’s more revealing findings concerned providers’ own information.

Some firms didn’t have a sufficiently clear understanding of the exact benefits, charges and customer outcomes within every legacy product. Older policies may be spread across several administration systems, with records held in inconsistent formats or inherited through past acquisitions.

That creates a practical Consumer Duty problem.

A provider can’t demonstrate that a product offers fair value if it can’t reliably identify:

• what each customer is paying
• which benefits are included
• how the investments have performed
• whether particular customer groups receive worse outcomes
• whether charges are eroding smaller pots
• whether customers could move to a better option

The FCA has made clear that poor-quality data and old technology don’t remove a firm’s regulatory obligations. Providers are expected to address information gaps and maintain the data needed to monitor outcomes over time.

What does the Consumer Duty require?

The Consumer Duty requires regulated firms to act to deliver good outcomes for retail customers.

For price and value, firms need to assess whether the total price paid is reasonable in relation to the benefits customers can reasonably expect to receive.

This doesn’t mean every customer has to pay the same price or receive an identical result. It does mean providers need to understand material differences between products and customer groups.

The FCA was critical of assessments that grouped very different legacy products together and then reached a broad conclusion that the whole group offered fair value. That approach can hide policies with unusually high charges, weak performance or limited benefits.

The responsibility also applies to closed pension books that have been bought or transferred between insurers. Acquiring an old portfolio doesn’t reset or reduce the Consumer Duty obligations attached to it.

What good providers are already doing

The review wasn’t solely a criticism of the market. The FCA identified several practical improvements already being made by insurers.

Reducing or capping charges

Some providers had materially reduced legacy charges or introduced caps on annual management fees.

Others had removed old charging components that were no longer appropriate, including historic commission-related costs.

Simplifying pension products

Providers had identified groups of customers who could benefit from moving to newer or alternative contracts.

The better examples didn’t simply strip out old terms. They considered how valuable guarantees could be retained while customers received lower charges, improved online access or more suitable investment choices.

Consolidating similar funds

Some insurers were reducing the number of overlapping unit-linked funds.

This can lower administration costs and improve governance, particularly where several small funds follow similar strategies. The FCA also found some evidence that larger funds had produced better results over the periods examined.

Comparing different customer outcomes

Better-performing firms looked beyond an overall average.

They examined whether customers in particular products, fund ranges or circumstances were paying more or receiving weaker outcomes than other groups.

“Will my pension provider move me automatically?”

Possibly, but widespread automatic movement is not straightforward.

Providers may be able to change funds or vary some contractual terms where the policy permits it and the change is in the customer’s interests. They still need to consider legal, tax and complaint risks, communicate clearly and avoid foreseeable harm.

The Pension Schemes Act 2026 introduces contractual override powers intended to help improve outcomes in workplace pensions. Those provisions don’t currently extend to non-workplace personal pensions, although providers have argued for broader powers.

In many cases, progress will therefore depend on the existing contract, provider processes and whether the saver responds to communications.

Why “gone-away” customers remain a concern

A gone-away customer is someone whose provider no longer has reliable contact details for them.

Old pensions are particularly exposed to this problem because savers may have moved home several times, changed names or lost track of plans taken out early in their careers.

The FCA’s position is that an inability to contact a customer doesn’t remove the provider’s responsibility to monitor the value and outcomes of the policy.

That matters because disengaged customers may be the least likely to notice:

• ongoing fixed fees
• obsolete investment selections
• weak fund performance
• missing beneficiary details
• an approaching guarantee or policy deadline

Pensions dashboards are expected to help people identify and view different pension pots, although finding a pension and deciding whether to change it remain separate tasks. Providers are due to connect to the dashboards ecosystem in stages.

Myth-buster: “Old pensions are always expensive and need consolidating”

The claim sounds plausible because many legacy products do carry complicated or high charges.

What it misses is that the policy may contain benefits that disappear on transfer. It may also have exit charges, protected retirement terms or investments that cannot be replicated in the proposed destination.

Consolidation can reduce paperwork and make investment management easier. But transferring first and examining the guarantees afterwards is the wrong order.

The real question isn’t whether the pension is old. It is whether its charges, investments, service and contractual benefits still work together to provide reasonable value.

Two older pensions can require completely different decisions

A policy with high charges and no distinctive benefits

Martin has a £70,000 personal pension charging 1.6% a year across the product and underlying funds.

The investment range is narrow, online servicing is limited and the contract includes no guarantees. A modern pension offering comparable investments at materially lower cost may improve his likely long-term outcome, subject to transfer checks and suitability.

A policy with a guaranteed annuity rate

Helen has a £70,000 pension with higher charges, but the contract includes a guaranteed annuity rate available at age 65.

Moving could reduce her annual costs, but it would permanently remove the guaranteed income option. The value of that guarantee needs to be calculated and compared with the flexibility and potential benefits of transferring.

A small pension with a fixed annual fee

David has an old £6,000 pension carrying a £120 annual policy fee as well as fund charges.

The fixed fee alone consumes 2% of the pot each year. Unless the policy contains a valuable guarantee, the risk of long-term erosion may make consolidation or another provider-led solution particularly relevant.

The provider name, pot size or age of the policy alone cannot determine the right outcome. The contractual detail changes the decision.

What can savers check on an older personal pension?

A useful review begins with facts rather than a request for an immediate transfer quotation.

Ask the provider for:

• the current fund value
• every product, policy and investment charge
• any fixed monthly or annual fees
• current and historic fund holdings
• investment performance after charges
• exit or transfer penalties
• guaranteed annuity rates or maturity benefits
• protected tax-free cash
• life cover or waiver benefits
• the selected retirement age
• available fund switches
• whether the plan accepts partial transfers
• the death-benefit position
• any deadline for exercising guarantees

Charges may appear under several names and in several documents. The annual management charge shown for a fund may not include the product fee, policy charge, bid-offer spread or other historic deductions.

A single quoted percentage may therefore be an incomplete description of the total cost.

“Can I compare my pension with a modern one myself?”

You can compare visible features such as charges, investment choice, online access and withdrawal flexibility.

The more difficult part is placing a financial value on benefits that would be lost. Guaranteed annuity rates, protected tax-free cash and unusual retirement terms can require specialist analysis.

Tax position also matters. Transferring can affect protected benefits, the timing of retirement income and, in some cases, whether regulated advice is legally required.

A direct comparison is most reliable when both sides are assessed on the same basis: total cost, investment strategy, service, retirement options and the value of guarantees.

Risks, limitations and practical boundaries

A transfer is usually irreversible

Once an old policy is transferred and closed, its guarantees and contractual rights generally can’t be restored.

Lower cost doesn’t guarantee higher returns

A cheaper pension leaves more money invested, all else being equal. Investment performance still depends on asset allocation, market conditions and fund management.

Staying put also carries a cost

Doing nothing can mean continuing to pay avoidable charges or remaining in an unsuitable investment fund. Inaction isn’t neutral simply because no paperwork is completed.

Comparisons can be misleading

A fund charge of 0.4% in one pension may sit alongside a separate platform fee. Another plan may quote one combined charge. Total costs need to be compared consistently.

Investment risk may have changed

A fund selected when the policy began may no longer match the saver’s timescale or capacity for loss, particularly as retirement approaches.

Advice requirements may apply

Transfers involving safeguarded benefits valued above the relevant statutory threshold can require regulated financial advice. The precise position depends on the type and value of the benefits.

Scams remain a transfer risk

Unexpected contact, pressure to move quickly, unregulated investments and promises of unusually high or guaranteed returns are warning signs. A legitimate concern about legacy charges should not be used as a route into an unsuitable or fraudulent arrangement.

How this compares with the closest alternatives

What happens next for pension providers?

The FCA has asked all relevant insurers to review its findings and apply the examples of good practice.

It plans to follow up with firms on the action they have taken. Where progress is inadequate, evidence is weak or legacy customers continue to receive poor outcomes, the regulator has said it may take supervisory or regulatory action.

This review sits alongside wider pension reform.

The developing Value for Money framework is intended to make investment performance, costs and service quality more comparable within workplace defined contribution pensions. Larger workplace arrangements are expected to begin publishing assessments from 2028, with broader implementation planned from 2029.

Those rules don’t directly solve the legacy personal pension problem, but they reinforce the direction of travel: providers will increasingly be expected to demonstrate value with evidence rather than relying on the fact that a customer has remained in a product for many years.

What the evidence still doesn’t clearly tell us

The FCA review doesn’t identify particular providers or products that savers can classify automatically as good or poor value.

Its data also wasn’t sufficiently standardised to support straightforward comparisons between firms. Different charging structures and inconsistent performance information limit the conclusions that can be drawn from market-wide averages.

We also don’t yet know how quickly each provider will simplify its closed books, reduce charges or contact affected customers.

Contractual, tax and administration barriers vary between policies. Some improvements can be made relatively easily, while others may depend on legislative change, customer consent or extensive work on old systems.

Most importantly, the review doesn’t answer whether a particular individual ought to transfer. That depends on the policy terms, available alternatives and the saver’s retirement plans.

Frequently asked practical questions

How do I find out what my old pension charges?

Start with the latest statement and policy schedule, then ask the provider for a complete breakdown of product, administration and investment charges. Request the figures in pounds as well as percentages where possible. Also ask whether any fixed fees, transfer penalties or historic commission deductions apply.

How long does an older pension review take?

A straightforward policy with clear records may be reviewed relatively quickly. It can take longer where the provider needs to retrieve archived documents, confirm guarantees or reconstruct charges from an old system. Avoid setting a transfer deadline until all contractual benefits and exit terms have been confirmed in writing.

Will I pay tax for transferring a pension?

A recognised transfer between registered UK pension schemes is normally completed without an immediate income tax charge. Tax problems can arise with unauthorised arrangements or where transfer rules aren’t followed. The receiving scheme, transfer type and any protected benefits need to be checked before proceeding.

Can I move only part of an old pension?

Some policies permit partial transfers, but many legacy contracts don’t. Even where they are available, a partial transfer may affect guarantees, charging tiers or remaining benefits. Ask the provider to explain in writing what would remain after the transfer and whether the original policy terms would continue unchanged.

Review the contract before deciding what to move

The FCA’s findings make older personal pensions worth revisiting, particularly where charges are unclear or the policy hasn’t been examined for several years. That review doesn’t need to begin with a decision to transfer. Establish the total cost, current investments and contractual benefits first, then compare the existing plan with realistic alternatives. The right outcome may be to move, switch funds, ask the provider for a better option or leave a valuable policy exactly where it is.