Consolidating your pensions

What's pension consolidation all about?

Updated 31st May 2024

Let's imagine you've worked for several companies throughout your career, and you've saved up a bit of pension money with each one. Now, you've got a handful of different pensions, each sitting in its own pot. Rather than leaving them in separate pots, you might want to consider merging them all into one - that's what we call pension consolidation.

This guide looks at the benefits of combining pensions, highlighting when transferring everything into one pot can be a good idea and when it’s better to leave things as they are.

Thinking about combining your pensions?

Putting all your pensions into one pot can make life a lot easier. It can help you keep track of your money, potentially save on fees, and could even help your pension money grow faster. But before you jump in, the sensible option is to think about what types of pensions you have, how much they're worth, and how they're being managed. Some pensions may have special rules or guarantees, so it's always a good idea to chat with a financial adviser first.

Each of your pension pots has its own set of management fees. By combining them into the one with the smallest fees, you could save money. But remember, even a small management fee can eat into your pension over time, so it's essential to get some advice before making a decision.

Making your life easier with pension consolidation

Managing one pension pot is a lot simpler than dealing with several. Plus, if you've got pensions scattered across different providers, there's a higher risk of losing track of one. There are several advantages to combining your pensions.

A risk of having so many pensions is the potential to lose sight of what you have built up over the years. According to the Association of British Insurers (ABI), the value of lost pensions in the UK amounts to £26.6billion.

The Governments Pension Tracing Service is a free service you can use if you need help finding any missing workplace or personal pension schemes.

Should you combine your pensions?pension consolidation

Often, putting your pensions together before you retire is a smart move. But sometimes it's not the best option. For example, if you've got a final salary pension, this gives you a guaranteed income for life. Also, some pensions offer a guaranteed rate for buying an annuity (a product that gives you an income in retirement), which you might lose if you transfer out. And finally, check to see if there are any penalties for transferring your pension. If there are, your adviser can help figure out what to do.

Getting started 

Before you start combining your pensions, get some professional advice to consider your personal circumstances and help you make the right decision.

Remember, you can also add to your pension before you retire. For example, you could transfer some savings into your pension pot.

Should I combine my pensions?

Whether you should combine all or some of your pensions will depend on the types of pensions you have, whether you are able to transfer them, the charges you pay and if you will face any penalty fees by moving them.

Getting advice from a pension specialist will help you understand your options and the best course of action to take. Remember, once you have transferred a pension, any benefits you were receiving will be lost. So take your time, avoid any pension scams and if you’re are seeking advice, make sure you choose a company you can trust.

Next steps

We've teamed up with Age Partnership, one of the UK's leading pension specialists, who can ensure your pension pots work hard for you.

Their retirement specialists can compare leading pension providers including Aviva, Standard Life, LV, Prudential, Canada Life and Hodge Lifetime, to find the best pension income deal for you.

They are so confident of achieving this that they will give you £100 if you find a better like for like quote elsewhere.

Alternatively, if you want to choose your own independent adviser the service at Unbiased will help you find an adviser.



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