Combining your pension plans questions: answered

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Sean Young

November 14, 2023

4 mins read

We regularly run free retirement webinars, where those attending can put their burning questions to a panel of experts. We’ve noticed a lot of questions about combining multiple pension plans – so retirement expert Sean Young is here to answer some of the most common ones. 

Before we kick things off, let’s look at what combining actually means.

Some people find themselves with more than one pension plan and choose to bring them together into a single plan. This is what we mean when we say ‘combining’.

To do this, you might transfer your old plans into a plan with your current provider. Or you might move your plans to a different provider altogether.

Anyway, over to Sean! 

Hi, Sean! Is it better to combine pension plans or keep them separate?

That’s a question we get a lot! There isn’t a straight answer for that because it really depends on the type of pension plan you have.

There are things you’ll need to think carefully about. You might have pension plans that have special features or guarantees. So it’s best to check with your providers to see if you’d lose any of these by transferring.

You might have a bigger discount, say, if you’re in a specific workplace scheme. So if you decided to combine your plans with a different provider, you could lose that discount. 

Older types of schemes could potentially offer things like a guaranteed annuity rate or a guaranteed minimum pension – which, again, you could lose if you transferred into a different plan. 

Or let’s say you’re someone who’s invested in with-profits funds. The with-profits funds you’re in now may no longer be available, so if you came out of them, you wouldn't be able to go back in. And you could lose the guarantees that go along with them. 

And here’s another thing to consider. Usually, inheritance tax doesn’t apply to pension pots. But if you bring your plans together with another provider while you’re in poor health and you die within two years of transferring your plans, some of your pension savings could actually become subject to inheritance tax.

But there are certainly positives to adding your plans together. One positive is organisation – you can have everything in one place, which can reduce the amount of admin you need to do. And it can make it easier to see how much you actually have in pension savings.

Charges can potentially go down as well. If you bring your plans together, you’re only paying charges for one plan, rather than several. But remember, some providers charge more or less than others.

Another positive of bringing your plans together is the discounts you could get. For example, some providers will have a discount structure where the more money you have in a plan, the bigger the discount you could get.

Some people combine their plans because they don’t want to lose track of them. But how can I find any plans that I’ve already misplaced?

New pension pots can get started every time people move companies, so there are absolutely going to be lost pots out there. I don’t know how many jobs I’ve had since I was 16…quite a few!

The best way to get an idea of whether you have any pension plans elsewhere is the government’s Pension Tracing Service. All you would need is your National Insurance number, and the name and address of your old employers. The service will then show you the pension providers your employer used and the time period they used them in.

Can you transfer a defined benefit pension plan into a defined contribution one?

Some public sector defined benefit schemes – like the Teachers’, Civil Service and NHS schemes – can't be transferred. 

As long as you haven’t started getting money from them, you can bring most other defined benefit (‘final salary’ or ‘career average’) plans into a defined contribution (‘money purchase’) plan. But again, you’d need to make sure it’s worthwhile for you to do that. A defined benefit plan could potentially come with more benefits. The last thing we’d want is for you to be financially worse off. 

We’d encourage you to check with a financial adviser and your defined benefit provider to see what benefits you could potentially lose and if a transfer is possible.

If the value of your defined benefit plan is more than £30,000, the Financial Conduct Authority (FCA) requires that you take financial advice before transferring.

Can you transfer a defined contribution plan into a defined benefit one?

That depends on the pension provider. You’d need to check if that’s something your own defined benefit provider could do.

Can I transfer some money from one plan to another? Or does it need to be the entire pot?

This is called a partial transfer, and it’s something you might be able to do. Pension providers may look at this type of thing on a case-by-case basis. Your partial transfer might be accepted. If it is, check with your providers to see how long it’ll take to be granted.

Is there anything else we need to know?

When it comes to your pension plans – which are there to look after you in your retirement – it’s important that you think carefully before making any big decisions. 

You can find out more about transferring and combining your pension plans on MoneyHelper, which is backed by the government. 

If you’re over 50, you can also get free guidance from Pension Wise, a service from MoneyHelper.

In terms of actually combining your plans, it’s often quite easy to do. You may be able to do it all online. Or you may need to fill out things like discharge forms. 

If you do want to combine your plans, do shop around to see what’s best for you. 

The information here is based on our understanding in November 2023 and shouldn’t be taken as financial advice.

A pension is an investment and its value can go down as well as up and may be worth less than was paid in.

Standard Life accepts no responsibility for information in external websites. These are provided for general information.

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