Got Multiple Pension Schemes? Should You Consider Combining Them?

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Administering and regularly checking a single pension can be a hassle, and that inconvenience can be multiplied if you have more than one fund. The charges you pay between these pensions may also vary, with some being considerably more expensive than others. 

These are two reasons why you could benefit substantially from combining your pensions. Another, potentially more serious, reason for doing so is that some or all of your pensions may not be performing as well as they should be. Worse still, they could be losing money. In this situation, your financial future could be in jeopardy, so combining them into a better-performing scheme could be essential.  

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How Could You Have Several Pensions?

The most apparent reason, I suppose, is that you’ve simply decided to take out several different schemes. However, there is a situation whereby you have several pensions that you don’t know about. If you’ve moved around between different employers throughout your working life, chances are you will have several other workplace pensions. 

Auto-enrolment came into force in 2012, making it a legal responsibility for employers to automatically enroll their workers in a workplace pension. Therefore, for every job you’ve had, you could have a corresponding workplace pension. It is your responsibility to keep track of these, and you can check them down via a pension tracing service. 

Pension Tracing Services

If you have lost or forgotten about previous pensions, there are two methods of tracing them:

  • Via the government’s Pension Tracing Service on the website.
  • Using an independent pension-tracing company. 

Using the government’s system is straightforward and free. However, you are limited to the information you can receive, and you’ll need to follow up with a call to the pension provider. The alternate route of using a third-party company to trace your pensions may be less hassle for you. However, there are likely to be costs involved, so ensure you know these before entering into any agreement. 

Many third-party pension-tracing companies use the government portal as their first point of search. You’ll have to provide them with some basic details, then they should be able to get on with their search.

Pension Combination Can Reduce Charges

Each of your pensions will have a set of charges, with some being obvious and others a little less transparent. Although it may not seem like much, a difference of just 1% in the costs in similar pension products will have a significant difference to the value of your pot when projected over the lifespan of your pension scheme. By combining your pensions into the scheme with the lower charges, you can get rid of the higher charges. 

Combining Your Pensions

You may choose to do this yourself, or you can use a specialist pension-combining service. These companies will gather all the information they need about your various pensions, then combine them into a single scheme. However, you cannot be sure if they will achieve lower charges as these companies don’t check fees or performance; they simply combine your pensions. Therefore, you might actually end up paying more in charges after the combination. 

Why Use a Regulated Financial Advisor

When combining your pensions, there is a compelling argument for using a regulated financial advisor. They will check all of your pensions, and help you decide if a combination is your best option. If it is, they will know what you were paying previously in charges, so they can recommend lower-cost options.

Deciding to combine your pensions solely to reduce administration is not necessarily the best financial option for you. Your financial adviser might even recommend that you keep some or all of your pensions separate, as they each may have different features and benefits that are worth keeping. 

Regardless of your situation and the advice they offer, using a regulated financial adviser will likely leave you financially better off. An ILC study from 2019 concluded that people who received professional financial advice had an average of £30k more in their pension pots. 

Thinking Of Combing Your State Pension?

Unfortunately, there is no means of combining your State Pension with any of your other schemes. The State Pension is a government benefit that you will receive depending on whether you have met the qualifying criteria.

Before looking at options for your pension, consider using a regulated financial adviser like Portafina or, view the info at Money Helper.

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