If you have more than one pension plan, it can be hard to keep track. One way to simplify things is to combine your old pensions into one plan. We cover some of the pros and cons to help you decide what’s right for you.
The average Brit changes job every five years. This means millions of us end up with multiple pensions to manage. And there’s always a risk of losing track of old pensions.
It’s estimated that £19.4 billion currently lies in lost pensions – some of which could be yours.
Combining pension plans
One way to keep you from losing track is to combine your old pensions into one plan. This can make things easier to manage, but it isn’t right for everyone.
Let’s take a look at some of the pros and cons.
Reasons to combine
For many people, one of the biggest benefits of combining pensions is simplicity.
Lots of pensions means lots of paperwork. Every time you change address you’ll need to let each provider know. When you nominate a beneficiary, you’ll need to submit a name to each provider. You’ll have multiple log-ins, and a range of different investments you need to make decisions about.
Moving your money into one plan could make it easier to keep on top of everything.
If you’re a Standard Life customer, it’s easy to keep track of your pension savings with our mobile app. Face and touch ID means you don’t have to worry about remembering multiple passwords and you’ll have a single view of your pension pot.
Every pension plan has its own set of fees and charges, so combining your pensions could reduce the amount of charges you need to pay. Charges will vary from provider to provider, and may change over time.
If you have older pension plans you haven’t checked recently, it’s a good idea to have a look and see what you’re paying. Higher charges can eat away at any investment returns.
If you’re in a workplace scheme, you may benefit from a discount or a rebate on fees. Combining your pensions together could mean that your older pension plans benefit too.
Looking after one pension plan means it’s easier to make sure your pension investments match your risk appetite and financial goals. Most pension funds are also already diversified – so you’re not putting all your eggs in one basket by combining pensions.
Some pension plans may have added protections. So if you’re thinking of moving your old pension plans into a new one, it’s important to check if the new plan is protected by the Financial Services Compensation Scheme (FSCS). This means you could claim compensation if your pension provider goes out of business.
Standard Life is a proud member of the FSCS and several protections may apply to your pension if you’re a Standard Life customer.
Reasons not to combine
Check your benefits and guarantees
Some pension plans have special benefits and guarantees that you would lose if you moved your money. This is more likely to be the case with older pensions but it’s important to check so you don’t lose out.
Check with your provider or previous employer – and read our guide on pension transfers to find out what to look out for.
Check your investment options
Moving pension provider could mean a change in the range of investment choices you have access to. Before moving your money, it’s a good idea to make sure you’re still able to invest where you want to.
Check your charges
All pension plans come with charges but how much you pay varies from provider to provider. To avoid paying more in fees, it’s important to check your charges and compare your new plan with your old one.
If you’re not sure what to do, consider getting financial advice. If you don’t already have an adviser, unbiased.co.uk can help you find one in your area. There is likely to be a charge for advice.
Tracking down old pensions
It’s easy to lose track of pension plans when you move house or jobs. If you think you’ve lost a pension somewhere along the way, a good place to start is to contact your pension provider. Not sure who that is? Use the Government’s pension tracker to help you fill in the blanks.
It won’t tell you how much your pension is worth but it can tell you the contact details for your provider so you can get in touch and start organising what’s yours.
Want to combine your pensions? Here’s what to do
Transferring pensions sounds like hard work. The truth is, you can get started in a few minutes, and your pension providers will do most of the hard work for you.
For each pension plan, all you’ll need is:
- The name of your provider
- Your plan number
- The approximate value
All of these should be on a recent statement.
If you’re a Standard Life customer, you can usually combine your plans quickly and easily by logging in online or via the Standard Life app.
Remember a pension is an investment. Its value can go down as well as up and it could be worth less than what was paid in.
The information here is based on our understanding in January 2022 and shouldn’t be taken as financial advice.