Should I combine my pensions?

This content was reviewed and approved by Tamlin Russell.

A pension offers a financial safety net during your later years, giving you an income long after you’ve left the workplace. Saving into a pension can help you enjoy a good standard of living and ensure you make the most of your retirement.

But in a career spanning many decades and different employers, you could end up with multiple pension pots – which can easily be forgotten about. Combining pension pots into one plan has become more common in recent years. But it’s important to consider all the potential benefits and drawbacks before making any decisions.

Read on to discover how to combine pensions, what the process can achieve, and why it might not be right for everyone.

What is pension consolidation?

Pension consolidation is the process of combining different retirement pots into a single plan. This is also known as merging or combining your pensions, moving money from multiple pots to a single one.

Consolidating pension pots may sound like financial jargon at first, but the goal is straightforward: to streamline the various personal and workplace pensions you’ve collected over the years, making them easier to manage. After all, it’s much simpler to see how one pension is performing, rather than seven or eight.

Simplicity isn’t the only reason people choose to merge pension pots. Many follow this path to save money on charges too, by reducing the number of schemes they pay management fees on.

How pension consolidation works

Pension consolidation involves shopping around for a provider you can trust, with competitive charges and the right investment options to suit your needs. 

Once you’re certain it’s right for your finances, you can ask for your existing pots to be transferred to the same place. Many providers even allow you to combine your retirement pots online, although you may be asked to seek financial advice first.

Just remember that combining pension pots won’t be the best option for every saver, and it’s certainly not something to rush into. It’s mainly designed for defined contribution pensions – where your money is invested and the amount you get out depends on both investment performance and the sum saved.

In fact, there’s a danger you could miss out on valuable benefits by transferring final salary schemes, which are based on your length of service with an employer and wage.

Reasons to consider combining your pensions

You may choose to combine your pensions to make them easier to manage and keep track of. For example, if you’ve changed jobs over the years, you may have several workplace pensions with different employers. Bringing these together can simplify things so you’re only dealing with one provider, including when the time comes to start drawing an income.

If you have defined contribution pensions, combining them can also offer benefits, such as:

• It could help you save money through lower fees.
• Gives you access to a wider range of investment options.
• Give you more control over how your pension is invested.
• Provide more flexibility when it comes to taking money from your pension.

Pension fees have generally been falling over time, and many newer schemes are cheaper than older ones. Even a small reduction in charges can make a difference to a pension’s value, especially if it stays invested for a long period of time.

Additionally, if you’d prefer to take your pension income as multiple lump sums, but your current provider doesn’t allow it, you could combine your pensions into a scheme that does offer this flexibility.

Should I combine my pensions?

Consolidating pension pots is a serious decision and one which could have an impact on your financial future. Your thinking should be guided by the types of pension schemes you’re a member of, the charges and penalties you’re likely to face, and any benefits you could be forced to give up, such as guaranteed annuity rates.

If you’ve changed employer during your career, chances are you’ve built up more than one pension pot. Keeping track of multiple pensions can be time-consuming and confusing, and it can make retirement planning feel more complicated than it should be.

Combining your pension plans can help lower costs while reducing paperwork and admin. It also means more of your money stays invested and has the potential for growth for you to enjoy in retirement.

Benefits of combining your pensions

You’ll find a range of potential advantages of combining pension pots. If you’re wondering ‘Should I combine my pensions?’ here are a few reasons why it might be a good idea:

Monitor your savings easily

It’s easier to keep an eye on your contributions and get an accurate pension forecast when all your cash is in one place. You can calculate how much pension income you’ll likely get when you retire with our quick pension annuity calculator. 

Pay lower fees

Consolidating your pension pots can help you avoid management fees on multiple schemes. Your older plans might carry higher charges than the latest products too.

Greater investment choice

Moving to a newer scheme or self-invested personal pension (SIPP) could give you more options when investing your pension savings.

Stay within personal allowances

With multiple schemes to remember, it can be difficult to check that you’re keeping to the annual allowance which is the most you can save in your pension pots in a tax year before you have to pay tax. According to Gov.uk, this currently stands at £60,000 for the 2026/27 tax year, and you’ll only pay tax if you go above this.

More flexibility

Today’s pensions can be more flexible compared to older pensions. For example, flexi-access drawdown pensions– allowing you to access funds as and when you need them.

Reduced admin

Combining pensions makes it easier and more convenient for you to access your funds when they are all in one place.

Drawbacks of combining pensions

Some of the possible disadvantages of pension consolidation include:

Losing out on final salary pension benefits

Also known as defined benefit schemes, final salary pensions offer valuable benefits which shouldn’t be given up lightly.

Paying large exit fees

Your existing pension providers may charge you a fee for leaving. It’s vital to do the maths to ensure combining pension pots makes financial sense.

Giving up perks like guaranteed annuity rates

Annuities are a way of turning your pension pot into a regular retirement income. You may find some of your older pension schemes offer guaranteed annuity rates. A guaranteed rate can give you a much higher income than you’d normally get.

Changes to minimum pension age

The government is increasing the minimum pension age from 55 to age 57 from 6 April 2028. Accessing any pension benefits before age 57 may be protected in your current scheme if it has a protected pension age (PPA). If you move your pension, this could be lost.

How to consolidate pension pots

If you’ve done your homework, taken advice and still feel consolidation is right for you, just follow these steps to merge pension pots:

• Hunt down all your pension schemes. Collect any provider information and reference numbers from previous pensions by carefully going through your online and paper records.
• Get in touch with previous employers. If you’re unsure about your pension arrangements with a particular company, contact the HR or payroll team to get confirmation.
• Use the Pension Tracing Service. This government-backed organisation can help you unearth lost pensions, including both workplace and personal schemes.
• Tell your provider to consolidate your pots. Whether you’ve chosen a new company, or plan to stay with one of your existing pension providers, you’ll need to instruct them to start the consolidation process. Give them as many details as you can about the pots you wish to consolidate. They’ll then get to work contacting each provider in order to move your old pensions across. Depending on how many pots you’re consolidating, this can be a lengthy process and may take a few months. 

If you need some help, pension specialists can work with you to access your pensions and make recommendations on whether combining your pots is best for you. Chat to one of the team from our retirement advice service to ensure you’re making the most of your pension savings.

How can I find my lost pensions?

If you’ve lost touch with a pension provider, they won’t know how to pay you when you retire. Tracing your pensions now can help make sure you don’t miss out on income later. Here’s a simple way to do it:

Listing your past employers

Write down everywhere you’ve worked, even briefly, and include any personal pensions you set up yourself. Only rule an employer out if you’re certain you never had a pension there or you’ve already had your contributions refunded.

Find the pension provider names

Look through old paperwork or annual statements, contact former employers or colleagues, or use free tracing tools. If an employer no longer exists, check whether the scheme is now managed by the Pension Protection Fund.

Track down contact details

Once you know the provider names, use the Pension Tracing Service on GOV.UK to find up-to-date contact details. If a provider has changed name or merged, the Association of British Insurers can help point you in the right direction.

Contact the provider

Be ready to share details such as your National Insurance number, previous names and addresses, employment dates, and when the pension was set up. If they find your pension, make sure they have your current contact details, so you receive statements and important updates. Once you’ve tracked everything down, you can then decide what to do next, including whether combining your pensions could make managing your retirement simpler.

Is pension transfer the same as pension consolidation?

No, pension transfer is not the same as pension consolidation, and understanding the difference is important when you’re looking to combine your pensions.

A pension transfer is when you move the money from your current pension into another scheme or with a new provider, usually to access better terms. Once the transfer is complete, your original provider will no longer manage your pension. This can mean losing any specific benefits or features that were unique to that plan.

Pension consolidation, however, means bringing several pension pots together by moving them into a single scheme with a single provider. You’re in full control of the process, so you can decide which pensions to combine and which ones to leave where they are. There is no requirement to merge all your pensions in one go.

Need advice on how to make the most of your pension savings?

Take a look at the bigger picture with help from our retirement advice service. Our friendly advisers can look at your current pensions, discuss all your needs and priorities and assess the best solution for you. Request a call back today to get your pensions ready for the retirement you want to enjoy.

FAQs on combining your pensions

Asking yourself: ‘Should I combine my pensions?’ Here are some of the most frequently asked questions about pension consolidation to help you decide if it’s right for you.

How long does it take to combine pensions?

The time needed to combine all your pensions will depend on the number you’re consolidating, and whether your provider is required to track them on your behalf. Combining pension pots could take just a few weeks if you have all your scheme details to hand. But the process may run into months if you ask the provider to do the pension tracing for you.

Can I transfer my pensions myself?

Many providers will allow you to transfer and consolidate defined contribution pensions yourself, so long as you know all the scheme details. This can often be done through an online application. However, you’ll normally need the help of a financial adviser to transfer a final salary pension due to the complexity of the process.

How many pension pots can I have?

You can have as many pension pots as you wish. Combining pension pots is often used by savers to keep everything in one place.

Is there a penalty for transferring pension funds to another pension provider?

Some pension providers may charge an exit fee when you withdraw or transfer your money out of a pension pot. If setting up a new pension, there may be associated charges with this to consider when consolidating your pension. This will vary by provider.

Depending on the investment choices within the existing pension, you may also be exposed to a market value reduction (MVR).

Can you combine all your pensions?

Not all types of pensions can be transferred in the same way. Be aware that unfunded pension pots, such as the NHS Pension Scheme, can only be transferred to another defined benefit scheme. Combining your pension is mainly designed for defined contribution schemes.

When can I transfer my pension pot?

You can transfer your pension to another pension scheme, or combine it in one pot, at any time, as long as it’s one year prior to the date you are expected to withdraw from that pension scheme. 

There are options to transfer your pension before then, however, this is considered an early transfer for which there is often an associated fee to do so.

Please be aware that changing pension pots and not taking benefits before 2027 or 2028 could result in a change of minimum age that you can access to 57.

Learn more about pension consolidation with LV=