Should you combine your pensions? 8 factors to consider before consolidating

Written: 29/10/2026

Written: 24 September 2026. Updated: 28 October 2026

Key takeaways:

Many people end up collecting multiple pension pots throughout their working life.
It’s a good idea to track down lost pensions before creating a consolidation strategy.
Bringing some pension schemes together through consolidation could help streamline pensions admin and reduce fees.
It’s important to consider the impact on your benefits, investments, and tax-efficient withdrawal options before consolidating.
Pension consolidation may not be appropriate in some circumstances, so it’s important to consult a financial planner before transferring funds.

Throughout your working life, you may collect a variety of pension pots.

When you change employers, you will normally start contributing to a new workplace pension scheme. You might also have one or more self-invested personal pensions (SIPPs).

Having retirement savings spread across a variety of pots – each with its own rules, benefits, and fees – can make managing and tracking your pensions more complex. So, in some cases, combining your defined contribution (DC) pension pots into a smaller number of schemes could help simplify your pensions admin and reduce your fees.

But consolidation isn’t right for everyone. Without careful consideration and planning, you could lose out on valuable benefits and tax-efficient withdrawal options.

Read on to explore eight key factors to consider before consolidating your pensions.

1. Track down your old pension schemes before consolidating

It can be easy to lose track of old pensions or even forget about them entirely – especially if you paid into them for a short period many years ago. In fact, a 2026 survey by the Pensions Policy Institute found that an estimated 3 million pension pots are considered lost.

You might think your older pots won’t be worth much. However, because pension funds are invested and grow with compound returns, small pots set up a long time ago could have grown considerably by the time you retire.

So, before consolidating, it’s worth tracking down all your pensions to gain an accurate picture of your savings, fees, and benefits.

You may be able to find your scheme details on old paperwork or by contacting your previous employers. Alternatively, you can use the government’s Pension Tracing Service to access providers’ contact details.

The Pensions Dashboard Programme (PDP) aims to make it simple for savers to track down all their pension pots, bringing all workplace, private, and State Pensions together in one place. The service is expected to launch in 2027/28.

2. Pension consolidation could streamline your admin

Bringing your retirement savings together into a smaller number of pension pots might make your retirement admin more manageable.

With fewer balances to check and add up, you may find it easier to keep track of your retirement fund. What’s more, once you retire, having a smaller number of pots could make drawing an income simpler.

Having fewer points of contact, less paperwork, and fewer login details to keep track of could also make it easier to manage your pensions in future.

3. You could pay less in fees when you consolidate your pensions

For each of your pension pots, your provider likely charges regular fees for managing the scheme. Depending on your provider, these admin fees may be charged as a fixed amount, a percentage of your pot’s value, or a combination of the two.

On the surface, these fees may seem like a relatively small amount. However, when you pay admin fees across multiple pots for several years, these fees can start to pile up.

In some cases, consolidating your pensions can reduce your admin costs. This could leave more money in your pension over time, helping to boost your retirement savings.

It’s important to carefully consider each scheme’s fees before consolidation. Some providers will charge exit fees when you transfer funds out of your pension, so it’s worth checking what fees could apply before you consolidate.

4. Some pension schemes offer more flexible investment options

When looking at your pension pots and deciding whether to consolidate, you might notice that some are performing much more poorly than others.

Funds held in a pension are invested and grow thanks to compound returns. This is when your gains are reinvested, often leading to accelerated growth.

Generally, your provider will invest your pension in one of their default funds and make adjustments as the markets evolve and you approach retirement. However, these investments may not necessarily be suitable for your unique goals, risk appetite, and preferences.

Consider the following before you consolidate:

Investment flexibility: Some providers may offer greater investment flexibility and more options than others. So, if selecting your own investments is a priority, you might consider moving more funds into the pension with the most flexibility.
Growth: Moving more money into a pot with historically higher returns could accelerate your compound growth – although past performance isn’t a guarantee of future returns.
Minimum fund sizes: Some require a minimum investment amount. So, consolidating could open up more opportunities for you to grow your pension.

Remember, investing in one pension pot, rather than several, can also carry risks.

For example, if the scheme’s portfolio performs poorly in future, a larger portion of your savings could be exposed. It’s important to speak to a financial planner before deciding how you want to invest your pension.

5. Fewer pension pots could mean a simpler estate

From April 2027, unused pension pots will be included in estates for Inheritance Tax (IHT) purposes. As a result, your executor will need to track down and access all of your pension funds after you die to provide an accurate valuation of your estate and calculate any IHT due.

Consolidating your pensions into a smaller number of schemes could make it easier for your executor to settle your estate after you pass away, avoiding the need to hunt down and manage multiple pots at an already difficult time.

It’s worth noting that pension pots typically are not left to beneficiaries in a will. Rather, you will need to complete an expression of wish or nomination form for each of your pension pots. Consolidating your schemes may make it easier to keep all your forms up to date, ensuring each pot ends up in the right hands when you pass away.

6. Consolidating your pensions could mean you lose out on valuable benefits

Some pension schemes, particularly older ones, may offer valuable benefits. For example, you may be eligible for guaranteed annuity rates or flexible options for taking your retirement or death benefits.

Closing these schemes when you consolidate could mean you lose out on these benefits. So, it’s important to read the small print carefully before choosing whether to consolidate your pensions and which pot to transfer your funds into.

7. You might wish to leave small pension pots separate

In some cases, you may be able to withdraw smaller defined contribution (DC) pots before accessing your main pension savings.

As of 2026/27, the UK’s small pot rules generally allow you to take three pots worth up to £10,000 each in your lifetime. You normally need to have reached the normal minimum pension age (NMPA) to withdraw your small pot. The NMPA will rise from 55 to 57 as of 6 April 2028.

You can normally take the full amount, with 25% being tax-free and the remaining 75% subject to Income Tax at your marginal rate. While withdrawing from a larger pot would typically reduce your entitlement to tax relief on pension contributions, the small pot rules may allow you to take some funds from your retirement savings without impacting the tax efficiency of future contributions.

So, if you’re hoping to take some of your pension funds before retirement, leaving small pots separate from your main pension could be an effective strategy.

For most people, ensuring withdrawals are tax-efficient and don’t harm your retirement plans requires comprehensive planning – so it’s worth consulting a financial planner before making any withdrawals.

8. It’s worth seeking professional guidance before consolidating your pensions

While consolidation could deliver multiple benefits, it can also carry risks:

Transferring funds out of a pension and closing your scheme is normally irreversible, so you may not be able to change your mind afterwards.
Without careful planning, you could be surprised by exit fees, lose out on valuable benefits, or find you have to wait longer than you had hoped to start accessing certain funds.

It’s important to note that consolidation is normally only appropriate for defined contribution (DC) pensions. It’s generally unwise to transfer funds out of a defined benefit (DB) pension.

At Fiducia, our financial planners can support you in weighing the pros and cons of consolidation in your unique circumstances and devising a tailored strategy to suit your goals and priorities.

Learn more about how we support clients to consolidate and get clarity on their pension savings

Email us at email@fiduciawealth.co.uk or call us on 01206 321 045 to find out how we could support you.

Want to learn more about working with Fiducia? Discover 5 important reasons why over 90% of our clients recommend us

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

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