Combining your pensions

First published 11 October 2017 • Updated 22 January 2019

Over your career you may work for many different employers, and so may build up quite a collection of different pension pots and/or pension schemes. You might also have personal pensions, especially if you’d spent time self-employed. At some point (not necessarily near retirement) you’ll have to decide what to do with these – combine them into one, or leave them (or some of them) where they are.

Working out the best thing to do with depend on a number of factors, including what type of pensions they are, how much they are worth, and whether they currently have any special guarantees attached. Here are some of the things to think about and discuss with your adviser.

Can I save money by consolidating pensions?

Every pension pot you have will be managed separately, meaning each one has its own annual management fees. Some of these fees may be higher than others - for instance, some may charge 1 per cent or even more, but others may charge only 0.5 per cent. Combining your pots into the one with the smallest management fees can reduce this kind of waste, but take advice to make sure it's the right decision.

Your adviser may also help you find a fund with lower fees. A management fee of just 1 per cent can reduce the total size of your pot by more than 20 per cent over the course of a working life. So one little change made early enough could save you tens of thousands of pounds in the long run.

Are some of my funds performing better than others?

Fund performance can be another important factor. If you have several pots, it’s likely that one will have outperformed the others. This is another factor to consider when deciding which fund to select when combining your pensions. Alternatively, your adviser may recommend a whole new fund.

Do I have any defined benefit (final salary) pensions?

If you have a defined benefit (or final salary) pension, you may be offered the option to transfer it into a defined contribution pension (the most common type). You should think very carefully before deciding to do this. Such transfers involve trading a guaranteed lifelong income for a finite sum of money in the form of a pension pot. It is usually a legal requirement to seek independent advice before transferring a final salary pension, as this is a big decision and cannot be reversed.

Do any of my pensions have guaranteed annuity rates?

Some pension schemes offer a guaranteed annuity rate (GAR), which may enable you to buy an annuity with a much higher annual income that you would otherwise be offered. It may not be clear from your pension documentation whether you have one or not, but your adviser should check for you. Having a GAR is usually a good reason not to transfer out, as by doing so you would lose it.

Are there any penalties for transferring?

Check to see whether your pension’s transfer value is the same as its current value. If it is lower, then this may be because there are penalties for transferring. If there are, your adviser will need to check the nature of the penalties and whether they can be removed. 

How do I decide about combining my pensions?

Your adviser will go through all your pension paperwork with you and liaise with your providers, to help you build up a clear picture of your current pension arrangements. The adviser can then give you clear and unbiased recommendation, based on what you want from your retirement. There is no universal right answer when it comes to transferring pensions, which is why tailored advice is so important.

Remember, you can also top up your pension before retirement by making additional contributions - for example, transferring savings into your pension pot.

Am I saving enough into my pension?

If you want to know whether your pension pot will be enough for your retirement, there is a simple way to find out. Check out our article on how much to save into a pension.

Here you can find out more about planning for your retirement.

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About the author
Nick Green
Nick Green
Nick Green is a financial journalist writing for, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.