Savings

Combining pensions. What you need to consider

MoneyPlus Features Team

If you’ve started a new job or have gathered a few different pension plans over the years, it can be tricky to keep on top of what you have. It’s usually possible to combine your pensions into one pot but this comes with pros and cons – we take a look here to help you decide what’s right for you.

More than 10 million people have signed up for a workplace pension since the start of automatic enrolment in 2012. Most importantly, this means more than 10 million people are saving for their future with their employer chipping in too. However, with one study finding the average Brit will have six jobs in their lifetime and millennials could have as many as 12, it also means a lot of us will be trying to keep track of at least several different pension plans.

What about combining your pension plans?

You’re usually allowed to move your pension savings from one plan to another, but some rules and restrictions might apply. So, if you’re moving job, it might be a good idea to consider moving your pension from your old job too. But it won’t be right for everyone. So, before rushing into anything, let’s take a closer look at the pros and cons.

Reasons to consider moving

More flexibility

Modern flexible pensions can offer benefits that older pension plans don’t. For example, flexible drawdown of your pension pot, or access to an income for your loved ones on your death. If these options are important to you, it’s a good idea to check with your provider that they can offer them.

Less paperwork

Having several pensions may mean you have more paperwork to keep track of. Every time you change address, for example, you’ll need to let all of your pension providers know.

Every time you want to know the current value of your plan, you’ll have to use different log-ins to access those different values. You may also have a range of different investments that you’ll need to review and make decisions about. You’ll also have to let each provider know individually about where you’d like them to consider paying any death benefits.

Moving everything into one plan could help to simplify your life.

Lower charges

Every pension plan has its own set of charges and you may find that you can save with one set of fees. A good starting point is to contact your pension providers or carefully check your statements to see what kind of annual charge you’re paying.

If you have a few pension plans, including some older ones that you may not have checked for some time, it’s a good idea to review the charges. Higher charges can eat away at any investment returns. 

Reasons to consider staying put

Check your benefits

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’ pensions entitle you to a certain level of income in your retirement. Or older pension plans may have valuable guaranteed annuity rates. So if you have a pension like this, you may not want to transfer it as you could lose money by transferring.

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’s no guarantee you’ll get more money as a result of transferring. If you're unsure whether it is right for you, you should get some financial advice. In some cases, you may have to take professional advice before you move a pension, 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. There is likely to be a charge for advice.

Bear in mind that a pension is an investment. Its value can go down as well as up and could be worth less than what was paid in.

Tracking down past pensions

If you’d like to know more about how to track down your pensions from previous jobs, take a look at our article on the topic or visit the government’s Pensions Tracing Service.

If you choose to go ahead, here's how to get started

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.

If you have a Standard Life pension, you can usually combine your pensions online, or via the Standard Life app.

 

The information here is based on our understanding in November 2020 and shouldn’t be taken as financial advice.

Standard Life accepts no responsibility for the information contained in external websites referred to in this article. They are provided for general information only.