Should I combine my pensions into one pot?

This article is not intended to give advice or a personal recommendation. It's simply to get you thinking about your options. Pension investments can go down as well as up and you may get back less than has been paid in. 

Most people will move jobs quite a few times during their work life. That can mean multiple pensions to keep track of and maybe even losing track of money you've saved for the future. One option is to bring them together into one retirement pot. Let's take a look at the pros and cons.

More convenience

It's much easier and less time consuming to keep track of one pension than half a dozen. You won't have different accounts with paperwork and login details to deal with. And if you do something like move house, you won't have to worry about notifying several pension providers. 

Greater control

Bringing your pension under one roof can give you more control over how you invest. Maybe you have an old pension with limited investment choices that could be underperforming. By transferring to a new self-invested personal pension (SIPP) you can take control of your retirement and choose your own investments instead. But if that seems like extra work, many modern pensions have a selection of ready-made funds you can pick, based on your risk level and the time until you retire. At Aviva, we offer an award-winning, flexible SIPP. 

As with most investments, the value of pensions can go down as well as up, so you can get back less than has been paid in.

One big pot

When your pensions are scattered around it can be hard to see how your retirement money is shaping up. When you put them in one pot it can bring things into focus. You may have more money than you expected. Or it could be a good incentive to start saving more.  

Potentially lower costs

Older pensions sometimes have higher charges, so transferring to a modern one could reduce the cost of administration and fund management. And even a seemingly small reduction in the charges you pay could increase your eventual pension pot by a significant amount in the long term. With some pension providers, you may also pay less in charges as your pension grows. For example, once you have a certain amount in your pot, say £50,000, you might benefit from lower charges. 

Easier to track and switch

It can be easier to track and switch your investments if they’re in one place. Modern pensions allow you to look online to see where your pension fund is invested and how it’s performing. You can follow your progress and use online tools to see if you’re on the right track for a comfortable retirement or whether you need to increase your contributions. 

While there are advantages to consolidating your pensions, it isn’t right for everyone. And there’s no guarantee you’ll be better off. There are a few things you should think about first. 

Check your benefits and fees

Before you move your pensions, it's important to check whether you'll miss out on any safeguarded benefits as a result, such as a guaranteed annuity rate. Or if you'll lose any valuable benefits such as a higher than normal tax-free cash entitlement.

You should also check that you won’t have to pay any large exit fees. If you’re not comfortable looking for this information in your pension documents, a financial adviser could help. 

Compare charges 

There’s no guarantee that charges will be lower or investment performance better if you transfer. You could also miss out on market growth while the transfer takes place. 

Start by seeing if you have any information from your old employer that might have details about your old pension, like old payslips or annual benefit statements. If you can’t find anything, get in touch with the HR department or pension administrator at your old employer. They should be able to give you information about the pension scheme you were enrolled in. 

You can also check your National Insurance record through the government’s website or by contacting HMRC. It may have information on any pensions you’ve paid into.  

Use a pension tracing service

There are lots of pension tracing services that can help in tracking down your retirement money, the government has its own service too. 

At Aviva, we have single service called Find and Combine that’s free to use with no obligation – you don’t even have to be an Aviva customer. 

Just give us a few bits of personal information and any pension details you have. If we have enough information, we can contact your previous employers for you to track down any pensions. Then we’ll put together a report with details of the pensions we can find for you. What you decide to do with your information is up to you.

If your pension contains safeguarded benefits and is valued at over £30,000 you must get financial advice before transferring. These typically come with defined benefit (final salary) schemes and those that have guaranteed annuity rates. There will be a charge for that advice, but it's a legal requirement for your protection, so you're fully aware of the pros and cons of transferring this kind of pension. 

Whatever kind of pension you have, if you're not sure what to do with it, we recommend speaking to a financial adviser. They can take a look at your personal situation and tell you whether consolidating your pensions is right for you. You can find one at Unbiased or we offer tailored financial advice. An adviser will charge for their services.

Our free Find and Combine service can answer some of the important pension questions for you. You'll get a report with details of certain benefits you could lose or fees you may face by moving them.  You'll be able to see all the information easily online. 

If you've already checked your pensions and you're ready to combine them, you have the option to just transfer them instead.