Should I combine my pensions?

A clear guide to pension consolidation by Amme Ozioro

Quick summary
Combining your pensions, also known as pension consolidation, can be a good idea if it gives you a clearer view of your retirement savings and reduces admin. But transferring old pensions isn’t always right. You could lose valuable guarantees, protections or retirement options. Before you combine pension pots, compare the benefits, charges, investment choices and income options for each plan. If you’re unsure, regulated financial advice can help you decide with confidence. 

Why combine your pensions? 

Changing jobs is now a normal part of working life. The result is that you may build up several pension pots with different providers. Keeping track of them can take time, so it’s natural to ask whether bringing them together would make life easier. The answer depends on you and the pensions you hold. Pension consolidation may make your savings easier to see and manage. However, a transfer often can’t be reversed, and it could mean losing valuable benefits.¹ 

For many people the benefits of pension consolidation include: 

• Better visibility of your pension savings: Having your pensions in one place can make it easier to see how much you’ve saved and if you’re on track to achieve your retirement goals 
• Reduced admin and paperwork: Fewer pension providers help reduce time and effort involved in keeping track of multiple pension providers, log in details etc.  
• Easier investment management: With less pensions it’s simpler to manage what you’re invested in, review performance and make changes as your circumstances change.  
• Access to greater pension flexibility: Modern pension arrangements may offer a wider range of retirement income and death benefit options than some older schemes.

A useful way to think about the decision is to look at two things: the practical details and what matters to you personally. Every pension is different. The benefits of consolidation need to be weighed against any guarantees, protections or valuable features that could be lost by transferring. 

Start with the details 

Before moving any pension, find out exactly what it offers. Older plans can include benefits that are difficult, or impossible, to replace.¹ And some pensions have safeguarded benefits. When these are worth more than the legal limit, regulated financial advice may be required before a transfer can go ahead.² 

Questions to ask about each pension 

• Does it include guarantees or protected benefits? 
• Does it have a guaranteed annuity rate, and would that rate be valuable to you?³ 
• Could you take protected tax-free cash under the plan’s rules?⁴ 
• Does it have a protected pension age that affects when you can take benefits?⁵
• Does it support the way you may want to take an income, such as lump sums, an annuity or pension drawdown? Not every plan offers every option.⁶
• What can happen to the pension when you die? This depends on the pension type, plan rules and tax rules at the time.⁷

Even if you don’t need regulated advice, speaking to a financial planner can give you extra confidence. They can help you uncover valuable guarantees, weigh up charges and retirement options, and see whether consolidation makes sense for your wider plans. Most importantly, they can help you avoid losing benefits that could be difficult, or even impossible, to get back.  

Compare how the pensions work

The features of a pension matter, but so does the day-to-day experience. Compare: 

• provider and investment charges 
• any fees for switching investments or transferring 
• the range and type of investments 
• whether the investment options fit your objectives and attitude to risk 
• online access and ease of administration 
• the help available when you need it 

Charges come out of your pension, leaving less invested for the future. Small differences can add up over time.⁸ Still, it’s worth noting that the lowest-cost pension won’t always be the most suitable one. 

Once you’ve gathered the facts, the trade-offs should be easier to see. One pension may be cheaper and more convenient. Another may include guarantees or protections that you can’t replace. This is why it’s important not to rush. 

Think about what would make life easier

Now consider why you want to combine your pensions. You may want: 

• less paperwork 
• one clearer view of your retirement savings 
• fewer online accounts 
• a retirement plan that feels easier to follow

Those are all valid reasons. If fewer pension pots help you review your savings more often and stay focused on your plans, consolidation may feel worthwhile. 

Convenience alone isn’t enough, though. Check the benefits, charges, investments and protections first. You also don’t have to move everything. Combining some pensions while leaving others where they are may be a better fit. 

Multiple pensions? It’s easy to lose sight of the bigger picture.

There can be a lot to think about and it’s easy to feel overwhelmed, but that’s where we can help. 

A financial adviser does more than help with transfer paperwork. They can help you decide whether combining your pensions is the right move for you. 

They’ll compare charges, investment options, retirement income flexibility, death benefits, tax considerations and any valuable guarantees that could be lost if you transfer. 

Most importantly, they’ll make sure any decision fits with your wider financial plan, your attitude to risk and your long-term goals. 

Look beyond the headline cost 

A fair comparison looks at the whole package, not one fee in isolation. Review: 

• pension and investment charges 
• guarantees and protected benefits 
• investment choice 
• ways to take retirement income 
• service, paperwork and online access 
• the value of advice or ongoing support 

Professional advice can help ensure any transfer is considered in the context of your wider financial plan, retirement objectives, tax position and estate planning needs, rather than focusing solely on cost or convenience.

Top tip 

If a new pension would cost more, ask what you’d receive in return and whether those features are useful to you. Make sure you’re comparing like with like. A quoted fee may cover only the pension account, while another could include investment management or extra services. 

Protect yourself from pension scams 

Treat unexpected contact about moving your pension with care, especially if you’re pushed to act quickly. The Financial Conduct Authority recommends checking that a firm is authorised before dealing with it. ⁹ A transfer to an unsuitable arrangement or a scam could put your retirement savings at risk. 

Here’s some more support to help you avoid common financial scams. 

Here’s a practical pension consolidation checklist

Before deciding if you should combine your pensions, gather current information for each pension and compare:

• current value and transfer value 
• all charges, including exit or transfer fees 
• investment holdings 
• guarantees and protected benefits 
• your available retirement options 
• what can happen to the pension when you die

Need more help deciding?  

If you’re unsure if combining your pensions is right for you, please do speak to a regulated financial planner at Amicus Wealth Management. We can look at your pensions, explain the choices and help you understand the costs and trade-offs. 

If you decide to combine, we can take some of the stress out of the process, you need just complete a form and we can take care of the rest.

Free, impartial pensions guidance is also available from MoneyHelper.¹⁰ 

Important information 

This article is for general information only and isn’t personal financial advice or a recommendation to transfer or combine pensions. 

Tax and pension rules can change and depend on your circumstances. The value of investments can fall as well as rise, and you may get back less than you invest. 

Pension transfers aren’t suitable for everyone. You could lose valuable benefits, and a transfer may not be reversible. 

Workplace pensions are regulated by The Pensions Regulator. Employee benefit advice is not regulated by the Financial Conduct Authority. 

Sources 

¹ Financial Conduct Authority, Pension transfers; MoneyHelper, Pension transfers and consolidation: www.fca.org.uk/consumers/pension-transfer | www.moneyhelper.org.uk/en/pensions-and-retirement/pension-transfers-consolidation 
² GOV.UK, Pension benefits with a guarantee and the advice requirement; Pension Schemes Act 2015, section 48: www.gov.uk/government/publications/pension-benefits-with-a-guarantee-and-the-advice-requirement/pension-benefits-with-a-guarantee-and-the-advice-requirement | www.legislation.gov.uk/ukpga/2015/8/section/48/enacted 
³ MoneyHelper, Guaranteed annuity rates: www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/guaranteed-annuity-rates 
⁴ GOV.UK, Tax on your private pension contributions: www.gov.uk/tax-on-pension 
⁵ HMRC Pensions Tax Manual, Protected pension age: www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062205 | www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm062250 
⁶ MoneyHelper, Your options for using your defined contribution pension pot: www.moneyhelper.org.uk/en/pensions-and-retirement/taking-your-pension/your-options-for-using-your-defined-contribution-pension-pot 
⁷ GOV.UK, Tax on pension death benefits: www.gov.uk/tax-on-pension-death-benefits 
⁸ MoneyHelper, Pension scheme fees and charges explained: www.moneyhelper.org.uk/en/pensions-and-retirement/pensions-basics/pension-scheme-charges 
⁹ Financial Conduct Authority, Pension scams; Protect yourself from scams: www.fca.org.uk/consumers/pension-scams | www.fca.org.uk/consumers/protect-yourself-scams 
¹⁰ MoneyHelper, Pensions and retirement; Pension transfers and consolidation: www.moneyhelper.org.uk/en/pensions-and-retirement | www.moneyhelper.org.uk/en/pensions-and-retirement/pension-transfers-consolidation