Should I consolidate my pensions?

Is it better to consolidate pensions?

Most people will find it more convenient to have all their pension savings in one place. But whether it’s worth consolidating pensions depends on your goals and circumstances.  

On the plus side, it could be worth consolidating pensions if you:

• have pensions with different charge levels – consolidating them into a single low cost pension could lead to lower charges
• want a clear view of how your pension’s invested and whether you’re on track to save enough for your retirement
• want to access a wider range of funds to invest in
• are confident that one of your pensions will offer more support or options at retirement

But it might be better not to consolidate your pension pots if you have a pension that has: 

• special benefits, or bonuses or guarantees (for example if you’re invested in with profit funds), that you’ll lose on transfer
• particularly low charges, perhaps subsidised by your current or former employer, or that charges you for transferring your savings out of it
• features and benefits that you’re not confident you can compare with your other pensions

When you’re making your mind up, remember to check:

• each pension’s type, and whether it has any guarantees or special benefits
• any one-off exit fees you might have to pay
• any ongoing fees or charges before and after consolidation
• whether you need financial advice and how much it could cost

You’ll also have to choose which pension you’re bringing your other ones into. If you’ve got a pension through your current job, that could be the best choice. Most employers only make contributions into the pension scheme they have chosen for you. Transferring out of your current employer’s scheme may stop you from getting their ongoing contributions.  

What should I do next?

The first thing to do is ask yourself: “Is it a good idea to consolidate my pensions?”

If the answer’s yes, you can usually get the process going yourself. Check with your provider to see how that works.

If you’re not sure whether consolidating your pensions is the right decision, speaking to a regulated, independent financial adviser can help you understand the benefits, risks and whether consolidation genuinely leaves you better off. Our advisers specialise in DC pension consolidation and can assess your situation for a clear fixed fee of £1,495. You can usually pay this fee directly from your pension.

For advice on DB pensions, or to find an adviser near you, visit the Unbiased website.