Should I combine my pension plans?

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If you’ve gathered a few pension plans over your career, it can be tricky to keep on top of what you have. It’s usually possible to combine your pension plans into one pot, but there are things to consider. Here we take you through the pros and cons of pension consolidation to help you decide if it’s right for you. 

More than 10 million people have been signed up for a workplace pension since the start of automatic enrolment in 2012. Importantly, this means more than 10 million people are saving for their future with their employer chipping in too. 

However, with the average person in the UK changing jobs every five years, it also means a lot of us will be trying to keep track of several different pension plans. This is where pension consolidation could help to simplify things.

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What is pension consolidation?  

Pension consolidation is when you bring all (or some) of your pension pots together and combine them into one pot. 

Throughout your working life it’s likely that you’ll work for a number of different employers, and each new employer is obligated to provide you with a workplace pension plan and pay into it on your behalf. You might have also started personal pension plans for yourself, particularly if you’ve been self-employed at some point. This means you could end up with a number of different pension plans with a few different providers.

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Reasons why you might not want to combine your pensions

If you have any defined benefit pension plans or other guarantees

Some of your existing pension plans might come with special benefits and guarantees that you would be giving up if you transferred your pension savings to a different scheme and this couldn’t be reversed. For example, some ‘defined benefit’ or ‘final salary’ pensions entitle you to a certain level of income in your retirement. Or older pension plans may have valuable guaranteed annuity rates. 

These types of plans aren’t generally offered anymore, so this is less likely to affect you if you started working in the ‘90s or later. But if you do have a pension plan like this, you may not want to transfer it as you could lose money by transferring. If you are transferring out of a defined benefit or final salary scheme worth more than £30,000, you have to get financial advice first. There’s likely to be a cost of this.

The way to find out what you could be giving up if you move is to check with your pension providers or your previous employer. You can read more about what to check for on our pension transfer page.

There could be penalties for transferring

It’s important to check to see if transferring your pension plan means you’ll end up paying penalties.

If you’re not sure, a financial adviser should be able to look into this for you. They may be able to find out if there’s any way any penalties can be removed.

Check for charges and choices

Just as you might be able to get cheaper charges and more investment choices by transferring, the opposite can be true too. There’s no guarantee you’ll be better off as a result of transferring.

So, if you're unsure whether it’s right for you, you should get some financial advice. In some cases, you may have to take professional advice before you move a pension plan, to make sure you understand all the implications. If you don’t already have an adviser, unbiased.co.uk can help you to find one in your area. It’s likely there will be a charge for advice. 

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Is combining pensions right for you?

Most providers now let you transfer pension plans online, which makes things a bit easier. Usually all that you need is the name of your pension provider, your pension plan number and an approximate value. All of these should be on a recent statement. 

Bringing your pensions to Standard Life

If you think combining your pension plans is right for you, why not bring them together into one with us? It takes as little as five minutes to apply online and could help you feel more in control of your future. Here’s how:

• We won’t charge you to bring your pensions together
• Easily access your money from age 55 (age 57 from 2028)
• Start, stop or change your payments at any time
• Manage your money online or on our app

Transfer your pension