Should You Combine All Your Pension Pots into One? And How Should You Do This?

Should you combine all your pension pots into one big one? And how could you do this?


You are probably one of the many people who have moved from job to job during their careers. Different jobs mean different pension pots. You are not alone in feeling challenged by keeping an eye on them all.


We’ve collected some essential considerations for you:


1. Advantages of Combining All Your Pension Pots


  • Easier Management

    Keeping track of and managing all your pension savings is much easier with only one fund. Having multiple pension pots can be overwhelming. Dealing with heaps of paperwork from different pension providers is time-consuming and can be stressful. By combining your pension pots into just one plan, you put everything in one place. Keeping an eye on your retirement funds becomes easier. You can estimate the income you can expect from your pension and see how your investments are performing.


  • Saving Money

    You could save money by transferring pension pots from higher-cost schemes to one lower-cost one. Shopping around for a better deal can be rewarding. Checking on the fees you’re paying to all your different pension providers is also quite a task. So, looking for a one-stop deal with excellent value for your money makes sense. You can also easily keep track of your fees that way.


  • Greater Choice of Investments

    Combining your pension pots into one scheme could give you a greater choice of investments. If you’re not averse to risk, you may feel that you should look to boost your retirement savings with a better return on your investments. Combining your pension pots into one could give you a greater choice of such investment opportunities. But remember: the financial markets can be volatile, and past performance doesn’t warrant future results. Higher returns can never be guaranteed.


The advantages of combining all your pension pots into one are tempting. However, it is important to consider the other side of the coin as well to help you make an informed decision.


2. Disadvantages of Combining All Your Pension Pots


  • Greater Risk

    Are you in a defined benefit pension scheme? If your answer is yes, then transferring out of this scheme needs careful consideration. The scheme’s guaranteed retirement income is a safe way to invest without much risk. You need to ask yourself if you want to push this safety blanket away to explore risky territories. Before making a decision, you should consult a defined benefit pension transfer expert about your personal situation.


  • Potentially Lower Income

    Do any of your existing pension schemes offer Guaranteed Annuity Rates? You would have to think carefully before you transfer out of such a scheme. Guaranteed annuity rate for your pension scheme could give you a higher level of annuity income than you can find on the open market.
    Check the terms and conditions of your guaranteed annuity rate and whether the annuity provided is suitable for your circumstances when making your decision to transfer out or not.


  • Extra Charges

    Some pension providers charge if money is transferred out of their schemes, so-called ‘exit fees’. Check with your provider if they would charge you if you moved your money out of their plan. If you are close to retirement age, exit fees could leave you out of pocket. But, if you’ve still got a good number of working life years ahead of you, go ahead and make your calculations.


So, now that you know the benefits and drawbacks of combining all your pension pots into one, you can make an informed decision for your retirement planning.

If you decide to explore the possibilities further, read on.


3. How to Combine All Your Pension Pots into One


Once you are clear that the advantages outweigh the disadvantages for your personal pension situation, you need to know what to do next.


  • Get the Facts

    Your first step would be contacting your pension providers to get your transfer values and to check if there are any exit fees to consider.


  • Make Your Decision

    Having researched the options available for a combined pension plan and taking into account any fees, you can decide whether you want to go ahead.


  • Transfer Your Funds

    Finally, you ask your pension providers to transfer the funds into your new pension plan.


If this sounds too time-consuming or complicated, or you’re not sure that you understand the costs, benefits and risks involved, you should consult a Financial Adviser.


You can easily find a local Financial Adviser who will do all of this for you, usually for a percentage-based fee.


You can find FCA registered financial advisers who specialise in retirement planning at Unbiased.


Before you do this, you need to know that there are two types of pension transfers, defined benefits pension transfers and personal pension switches. You must hire the right financial adviser for your pension pot type.


A defined benefit pension is also known as an occupational pension with a final salary or career average pension pot. Here, the pension provider promises to give you a certain amount of money each year when you retire.


Defined Benefit Pension Transfer advisers must have the appropriate qualification to give pension transfer advice. Without the necessary qualification, they are not authorised to deal with this type of transfer.

For personal pension switches, you can consult any FCA registered adviser in your area who specialises in this service.


If you are in the Yorkshire area, we would be happy to have a chat with you about a personal pension switch. Please get in touch for a free initial consultation with one of our experienced advisers.


Risk warning

Please note that when you are investing, you are putting your capital at risk. The value of your investment can go down as well as up, and you could get back less than you invest.

The information in this post should not be regarded as financial advice.