Bringing pensions together

What to consider if you have multiple pension pots.

3 min read

The employment landscape has evolved significantly over the last few decades and changing jobs multiple times before retirement is now very much the norm. But did you know, there is an estimated £9.7 billion of unclaimed UK defined contribution pension funds?1

Over time, it is easy to lose touch with our pension savings providers as we change jobs, move home or if the companies we have worked for change ownership or close down.

This means that we can end up with several different pension pots, and it can be difficult to keep track of our valuable savings. If you’re one of the millions of people with multiple pensions, it may be appropriate to consider consolidating your defined contribution pension pots and bringing them together into one.

Even if you have not had many jobs, you could still have a number of different pensions to manage. If appropriate, pension consolidation can simplify your finances and make it easier to stay in control of your retirement savings.

Having said this, not all pension types can or should be transferred. It’s important to obtain professional advice so that you know and can compare the features and benefits of the plan(s) you are thinking of transferring.

Locating lost pension funds

If you think you might have lost a pension pot from a previous job, you can use the government’s Pension Tracing Service at This enables people to locate money previously saved for retirement, that is unclaimed. So, it is worth checking if you could have pension funds that have not been claimed.

What is pension consolidation?

Pension consolidation is the process of combining multiple pension pots into one. This can be done with a pension transfer or by opening a new pension and transferring your other pensions into it. You may want to do this to make it easier to keep track of your retirement savings, or to try and get a better rate of return on your investment.

Consolidating multiple pension pots into a single pension plan can offer several benefits, but it isn’t always the best option, and it is important to carefully consider your individual circumstances before making any decisions.

The benefits of pension consolidation include:

Simplicity: Managing multiple pension pots from different employers or providers can be complex and time-consuming. Consolidating them into a single plan can make it easier to keep track of your retirement savings and to manage your investments. It can also make it simpler to estimate your total retirement income and plan accordingly.

Cost Savings: Some pension providers may charge fees for managing each individual pension pot. By consolidating, you could potentially reduce these fees, leading to cost savings over time.

Better Investment Options: Some pension providers offer a wider range of investment options than others, so you might gain access to a broader selection of investments to meet your risk tolerance and financial goals.

Potential for Higher Returns: By having a larger combined pension pot, you might be eligible for better investment opportunities or fee structures that were not available with smaller individual pots. This could potentially lead to better returns over the long term.

Estate Planning: Consolidating pensions can make estate planning and passing on your pension assets to beneficiaries more straightforward, as there's only one account to consider.

However, for every benefit, there could also be a drawback.

The potential risks of pension consolidation include:

Loss of Benefits and Guarantees: Some older pension schemes may come with valuable benefits or guarantees, such as guaranteed annuity rates (GARs) or enhanced tax-free cash options. Consolidating these pensions into a new scheme could mean losing these benefits.

Loss of valuable employer contributions: If the consolidated pension scheme is a personal pension scheme such as a Self-Invested Personal Pension (SIPP), your employer might still be able to contribute, but personal pension schemes are usually funded by individual contributions, not employer contributions, so you could lose this valuable benefit.

Fees and Charges: Transferring pensions may involve fees and charges, such as exit fees from the existing pension providers and setup fees for the new pension scheme. These costs could eat into your pension savings and erode potential gains.

Investment Performance: If your existing pensions have been performing well, transferring to a new pension scheme with different investment options may expose you to investment risks or lower returns. It's important to assess the performance of both your current and potential new schemes.

Market Conditions: If you consolidate during a market downturn, you could potentially lock in losses from poorly performing investments. It's important to consider the timing of consolidation in relation to market conditions.

Limited Investment Options: Some pension schemes offer a limited range of investment options compared to others. Consolidating pensions might mean giving up the flexibility to diversify your investments as you wish.

Pension Transfer Scams: Be cautious of pension transfer scams. Fraudsters may try to convince you to transfer your pension into fake or high-risk schemes, leading to the loss of your savings. If someone contacts you unexpectedly offering to help you transfer your pot, it’s likely to be a scam. If you’re concerned, contact the Financial Conduct Authority (FCA) to check they’re legitimate.

Pension Flexibility: If you have a defined benefit (DB) pension, consolidating into a defined contribution (DC) scheme could mean giving up the security of a guaranteed income in retirement. DC pensions are subject to market fluctuations, so your retirement income might not be as secure.

Tax Implications: Consolidating pensions might have tax implications. Some pensions offer tax advantages that could change if you transfer funds to a different scheme.

In conclusion

Consolidating your pensions can help to simplify your retirement planning, offer potential cost savings and other benefits. However, selecting the most suitable pension scheme for consolidation can be complex. Different schemes have different features, costs, and investment options. Without proper research, you might end up with a scheme that doesn’t align with your goals and losing valuable benefits.

Always seek professional advice before making any decisions regarding pension consolidation

You only have one retirement so you don’t want to make any costly mistakes that you could one day regret. Before you look to bring your pensions together seek professional advice to evaluate your specific circumstances and to understand the potential impact on your retirement savings.

Source data:
1 October 2018/Lost pensions: what’s the scale and impact?/Pensions Policy

Please note: This content is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by interest rates at the time you take your benefits.

Accessing pension benefits early may impact on levels of retirement income and your entitlement to certain means-tested benefits and is not suitable for everyone. You should seek advice to understand your options at retirement.