Should I Combine My Pensions?

should i combine my pensions
If you have worked in a few places, there is a good chance you have pension pots scattered around. Combining pensions, also called pension consolidation, can feel like getting organised and it can bring peace of mind when you want a clearer view of your future.
At the same time, moving pensions is not always a simple admin task. Some pensions come with valuable benefits you could lose by transferring. This guide explains what combining pensions means, when it can be helpful, and when it can be risky.

What does combining pensions actually mean?

In most cases, combining pensions means transferring one or more existing pension pots into a single pension arrangement. For many people, this involves defined contribution pensions, where your pot value depends on contributions, charges, and investment performance.
Defined benefit pensions, often called final salary or career average schemes, are different. They promise an income based on salary and service, and transferring out can mean giving up guaranteed benefits. MoneyHelper separates guidance for defined contribution and defined benefit transfers for a reason.

Why people choose to combine pensions

Here are common reasons consolidation can appeal.
  1. Less admin and fewer logins
    Having one provider can make it easier to track contributions, statements, and nominated beneficiaries.

  2. A clearer investment approach
    With fewer pots, it can be easier to understand what you are invested in and whether it still fits your goals and timeframe.

  3. Potentially lower charges
    Some older workplace schemes or legacy products may have higher charges. Consolidation can sometimes reduce total fees, although it depends on the schemes involved.

  4. Reduced risk of losing track
    Small pots can be forgotten when you move jobs. Consolidating can reduce the chance of missing paperwork or losing touch with providers.

Reasons to be cautious before you transfer

Combining pensions is not automatically a win. These are the big watch outs.

  1. You might give up valuable guarantees or benefits
    Some pensions include features that can be hard or expensive to replace, such as guaranteed annuity rates, certain protected tax free cash features, or safeguarded benefits. MoneyHelper highlights the importance of checking what you would lose before moving.

  2. Defined benefit transfers are high stakes
    A defined benefit pension is not just another pot. You may be giving up a guaranteed income for life in exchange for a transfer value that then depends on investment performance and how you draw it later. MoneyHelper provides separate guidance for combining defined benefit pensions for this reason.

  3. Exit fees and market timing
    Some schemes apply exit charges or have restrictions. Transfers can also involve time out of the market depending on how the transfer is processed.

  4. Protection and scheme features can differ
    Different schemes can have different charging structures, investment options, and protections. It is worth understanding what changes when you move.

  5. Tax rules still apply, even if you consolidate
    Since 6 April 2024, the Lifetime Allowance has been abolished, but limits still apply to the total amount of certain lump sums and lump sum death benefits that can be received tax free, through the lump sum allowance and the lump sum and death benefit allowance. Consolidating does not remove the need to plan around tax rules.

When combining pensions may be worth exploring

Consolidation can be worth considering when:
  1. You have several small defined contribution pots from old employers
  2. You want a simpler view of your retirement savings
  3. Your older pensions have limited fund choice or relatively high charges compared with alternatives
  4. You are confident you are not giving up guarantees or safeguarded benefits
Even then, it is about weighing up what you gain versus what you might lose.

When to slow down and consider regulated advice

There are situations where professional advice is particularly important.
  1. You have a defined benefit pension and are thinking of transferring out
  2. Your pension includes safeguarded benefits
  3. The transfer value of safeguarded benefits is over 30000, where advice is required before transferring or converting those benefits in many cases
  4. You have been offered incentives, early access, or anything that sounds too good to be true
  5. You feel rushed or pressured
If you are unsure what type of pension you have, that is usually the first thing to confirm before making any decisions.

A practical consolidation checklist

If you are exploring consolidation, this kind of checklist can help you stay organised.
  1. List every pension you have: Include provider name, policy number, and whether it is workplace or personal
  2. Confirm the pension type: Ask whether each one is defined contribution or defined benefit.
  3. Check for valuable features: Ask your provider whether there are guarantees, safeguarded benefits, protected retirement ages, exit fees, or special terms.
  4. Compare charges and investments: Look at total charges and what investment options are available in each scheme.
  5. Decide where consolidation would happen: This could be your current workplace pension or a personal pension, depending on what is available and suitable for your circumstances.
  6. Understand timelines: MoneyHelper notes a transfer often takes between two and six weeks, but providers can have up to six months to action a request.
  7. Keep an eye out for scams: Only deal with regulated firms and verified providers.

A quick word on pension scams

Pension transfers are a common moment for fraudsters to try their luck. Since January 2019, cold calling about pensions has been banned, so unexpected contact about your pension is a red flag.
The FCA also warns that cold calls are illegal and probably a scam, and the safest action is to hang up.
If something feels off, pause, verify the firm on the FCA Register, and consider using free, impartial guidance first.

Conclusion

Combining pensions can make your retirement planning easier and clearer, but it is not purely an admin decision. The key is knowing what you have, what you might lose by moving it, and whether advice is needed before you transfer.

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