How to Consolidate Your Pensions | Money Saving Advisors
Step-by-step guide to merging your pension pots. Find out the process and what to watch out for.
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Make pension admin less painful
If you've worked a few different jobs, you probably have a few different pensions too. Managing them separately can be confusing - and sometimes expensive. Consolidating your pensions means bringing them into one pot, making it easier to track, manage, and plan for retirement.
Find your existing pensions
Before you can combine your pensions, you need to know what you have. That means tracking down every pension pot you've built up.
- Use the Pension Tracing Service: It's a free government service that helps you find pensions from previous jobs or providers. All you need is the name of your old employer or pension scheme.
- Check old paperwork or emails: Look for any annual statements, emails, or letters that mention your pension provider or account details. If your address has changed over the years, contact providers to update your details.
- Ask your past employers: If you're stuck, your old HR departments might be able to tell you about your previous workplace pension schemes.
Choose where to consolidate
Once you've found your pensions, you need to decide which one to consolidate into - or whether to open a new one.
- Compare your existing pots: Look at fees, fund performance, and investment choices. One might already offer the best features, so it'd be the obvious home for your funds.
- Consider opening a new pension: If none of your current providers offer great value, you might want to open a new personal pension with a provider that suits your needs better.
- Check for penalties or benefits: Some older pensions might charge exit fees or include guaranteed benefits. It's good to weigh these before transferring. If not sure, speak to a regulated financial advisor.
Summing up
Consolidating your pensions isn't just about tidying up. It can reduce fees, simplify your planning, and give you more control over your finances. Take your time, do your homework, and consider getting advice - especially if you've got older or defined benefit pensions.
Frequently Asked Questions
Can I consolidate all types of pensions?
You can usually consolidate most defined contribution (DC) pensions, like workplace pensions and personal pensions, into a single pot. But defined benefit (DB) pensions - also known as final salary schemes - are different. The might offer guaranteed incomes, and transferring them can mean losing valuable benefits. In most cases, consolidation is possible, but it's good to seek professional advice first.
Will I lose money by transferring?
It depends on the pension. Some older schemes might charge exit fees or come with perks like guaranteed annuity rates or protected early access ages. Some pension benefits might be lost if you move your money. That's why it’s important to review each pension's terms before transferring - and speak to a regulated advisor if you're not sure.
Is it better to consolidate into an old or new pension?
That really depends on the quality of your current pension pots. If one already offers low fees, flexible access, and a good choice of investments, it might be the best option. But if none meet your needs, a new pension with better features - whether it's sustainable investment funds or personalised options - could be the smarter home.
Can I do it myself or do I need an advisor?
You can usually handle pension consolidation yourself, especially if you're dealing with defined contribution schemes. Providers often have easy-to-use tools for transferring online. But if you're dealing with complex pensions, like a defined benefit scheme, or you're not sure about your options, it's wise to get regulated financial advice before making a final decision.
How long does pension consolidation take?
The process can take anywhere from a couple of weeks to several months, depending on the providers involved. Newer pensions tend to transfer faster, especially if done digitally. Older schemes, or those involving paperwork and postal communications, might take longer. Always follow up with providers and keep records of any communication to avoid delays.
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