Should I combine my pensions into one pot?

Pensions and retirement
Views & insights

Combining your pensions could help you save money and keep track of your finances more easily. Discover the pros and cons here.


4 October 2023 | 3 minute read

If you’ve worked for several employers throughout your career, you might have accumulated multiple pension plans. You may also have set up personal pensions, especially if you’ve been self-employed or a contractor at some point.

Owning multiple pensions can be an administrative burden, but it could also be costing you financially – whether that’s through excessive fees or poor investment performance.

Consolidating your pensions into one pot could help you keep track of your finances more easily, reduce charges, and boost how much money you have in the future. But while there are advantages to pension consolidation, there are potential drawbacks and it’s important to seek financial advice on whether it’s right for you. To help you get started, here are some of the pros and cons to consider.

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Pension consolidation: the pros

Keeping on top of several pensions can be time-consuming. If you have, say, five pensions, then that’s five lots of investment performance to monitor, five different charges to keep an eye on, and five statements to read through and understand each year. Few people have the time, know-how or even the inclination to do this accurately. For some people, therefore, transferring pensions to one provider may simply be about making their ‘life admin’ more straightforward.

You’ll also be paying the administration fees for each of your pensions, which may not be cost-effective. This is especially the case for those providers operating outdated and uncompetitive charging structures. Fees eat into your investment returns and may ultimately reduce how much money you have at retirement. By combining your pensions, you might be able to save on charges.

Fees aren’t everything, however, as you also need to consider the performance of each pension fund. It may be that some of your pensions have poor investment performance, and that moving to a different scheme offers better investment growth potential.

Comparing charges and investment performance isn’t easy to do on your own. We can carry out a thorough assessment of your pensions and advise on the best course of action for you.

Pension consolidation: the cons

Consolidating your pensions could prove financially detrimental if it means giving up valuable benefits and guarantees. Ones to watch out for include:

  • Enhanced pension commencement lump sum: this lets you withdraw more than the standard 25% tax-free lump sum which is usually available from a pension plan
  • Protected pension age: this enables you to access your pension savings earlier than age 55 (or 57 from April 2028)
  • Guaranteed returns: some older schemes may include a guaranteed annual rate of return, which means no matter how markets perform, your fund increases by a set amount each year
  • Guaranteed annuity rate: this lets you buy an annuity at a set percentage of your accumulated fund, which may be far higher than annuity rates available when you need to access your pension benefits
  • Built-in life insurance or critical illness cover

These benefits and guarantees aren’t always easy to spot, so it’s worth having your pension plans carefully reviewed by one of our financial advisers. Otherwise, there’s a risk you’ll throw away a valuable perk and end up with less money in retirement. We will also check whether any of your pensions charge large exit fees and, if so, advise whether it makes sense to stay put.

Be aware that there are some unscrupulous firms out there. If you do decide to have your pensions reviewed, be wary of pension scams. Reject unsolicited calls, emails and text messages, and make sure the firm is regulated by the Financial Conduct Authority and authorised to give pension advice.

Next steps

Consolidating your pensions isn’t a decision to be taken lightly. The money you’ve built up in pension funds over the years could be substantial, and a seemingly simple decision could turn out to be a mistake and harm your future financial security. On the flipside, making the right decision could mean a more comfortable future for you and your family. At RBC Brewin Dolphin, we can advise on what’s right for you, so you feel confident you’re making the right decisions with your money.

Tracing lost pensions

You might have pensions from earlier on in your life that you’ve lost track of, especially if you’ve moved house. They’re not always easy to find, as many pension providers have merged and changed their names over the years. One place to start is the government’s free Pensions Tracing Service. You type in the name of your former employer or pension provider, and it gives the contact details you need to request information on a lost pension.

The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. Information is provided only as an example and is not a recommendation to pursue a particular strategy.

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