How to Consolidate Multiple Pensions

Over a career it is common to accumulate multiple pensions with different employers and providers. Multiple pension policies increase personal administration and make retirement planning challenging to monitor.  

This guide will walk through the consolidation process and key considerations when combining your UK pensions. 

Why Consolidate Your Pensions? 

There are several advantages to consolidating multiple pension plans: 

Simplifies tracking and management – One account provides a unified view of your total retirement savings. 

Manage investment returns – Pooling policies allows you to manage the asset allocation. 

Reduces fees – Eliminates multiple plan administration charges. 

Enables consistent strategy – A single coherent investment approach is easier to implement. 

Facilitates drawdown – Taking retirement income from one consolidated pot is simpler. 

Provides peace of mind – Reduces paperwork and makes monitoring future growth easier. 

For those with three, four or more pension plans, consolidating can make retirement planning much more straightforward. 

  

Pension Consolidation Process Overview 

The process of combining your pensions follows a few key steps: 

1. Locate pension plans – Gather paperwork and contact each provider for each pension you hold. Confirm the latest values, switching penalties and legacy benefits (see below). 
2. Choose a consolidation pension – Select which existing pension will become your consolidated account or open a new one. Assess investment options, fees, and provider reputation.
3. Initiate transfers – Complete transfer applications with each provider to move your funds into the designated
4. Confirm consolidation – Review new consolidated account once final assets have been transferred, to check for accuracy.

While consolidating takes effort upfront, the simplicity moving forward is often appreciated for most savers. 

 

Key Considerations When Consolidating Pensions 

When assessing whether to consolidate and selecting your plans, consider these factors: 

• Lost Benefits or Protections – Some older pensions may have guaranteed annuity rates, death benefits or other provisions that could be lost. Evaluate if keeping these policies makes sense for you. 
• Investment Performance and Fees – Consider access to modern investment funds versus potential transfer fees.  
• Employer Contributions – Your employer will likely insist that their contributions are paid into their selected scheme.  
• Tax Implications – While normally tax-free, in limited cases moving funds could trigger tax charges. Seek tax guidance when unsure. 

Assessing these factors will determine if consolidation is prudent for each particular pension. 

 

Selecting Your Consolidation Destination 

Choosing where to consolidate your pensions is an important decision. Here are key considerations: 

Fees and Expenses – Compare administration costs, fund charges, and transfer fees across providers. Lower and transparent fees are preferable. 

Range of Investment Options – Look for a wide variety of investment fund choices from leading asset managers to create a properly diversified portfolio. 

Financial Strength – Select a financially sound provider with strong reserves who can manage your pension long-term. Check credit ratings. 

Customer Service and Tools – You’ll engage with your provider frequently, so pick one with a reputation for great service. 

Flexibility – This factor is relevant if you are nearing the point of commencing withdrawals. 

Taking time to carefully select your consolidation destination results in a more suitable solution. 

 

Drawing Benefits from Consolidated Pensions 

As you near retirement, consolidating your pensions makes taking withdrawals simpler. 

Review the provider’s options for withdrawal, like phased or ad hoc withdrawals, or annuity purchase:  

• Phased retirement strategies can be implemented more seamlessly from a single account. 
• If opting for annuity purchase, shopping among providers is easier when starting from consolidated position. 
• Tax reporting and tracking is cleaner when income originates from one consolidated source. 

Work with your financial adviser to craft an integrated retirement capital and income strategy based on your consolidated pension value and needs. 

 

Consolidate for a Simplified Retirement Picture 

While consolidating pensions does take some upfront legwork, the payoff is a simplified view of your total retirement savings in one place.

This makes ongoing tracking, investment allocation, and eventual income drawdown far easier to optimise.  

By selecting the right consolidated account provider, you can also open yourself to better investment options, reduced fees, and enhanced services.  

Speak to our team at Fiducia Wealth Management to determine if combining your UK pensions makes sense for your unique situation.