If you’ve got more than one pension, you will likely be in a good situation as far as planning for your retirement goes. However, multiple pensions are not always the best option, so you might want to consider combining them.
Combining multiple pensions into a single plan will give you less administration to deal with. Doing so could also reduce the amount you are paying in pension charges. Combining your pensions also provides you with the opportunity to review your schemes and get rid of any stagnant pension plans.
Common Reasons For Having Multiple Pensions
One reason why you might have multiple pensions is that you may have changed employers several times. Since 2012, employers have been legally obliged to auto-enroll their staff in workplace pensions for all employees over twenty-two and earning at least £10,000 a year.
Therefore, for every job you’ve had since then, you will likely have a corresponding workplace pension. You might even have pensions that you weren’t aware of or have forgotten you had.
How To Locate Lost or Forgotten Pensions
You can set about locating lost or forgotten pensions a couple of ways. If you want to do it yourself, you can use the Pension Tracing Service on the Gov.UK website. This service is relatively straightforward to use, but the information you can receive is often quite limited.
Alternatively, you can get an independent company to search for you. These companies generally use the Gov.UK website as a starting point for their search. If you choose one of these companies, ensure that it is worth the cost of their service before committing.
Reduce Your Pension Charges
Any pension you have will have some charges associated with it. However, not all pensions have the same level of transparency of charges. In fact, you could be paying a 1% difference in the charges you pay on two identical pensions. One percent might not seem like a lot, but it can mean a considerable difference in the value of your pensions when accumulated over years or decades. Combining your pensions into a single plan with low charges could boost your overall retirement funds.
Combining Your Pensions
You can choose to do this yourself, or you can use a third-party. Many regulated companies can combine your multiple pensions into a single plan, but that is the extent of their service, and they do not offer any pension advice. Also, it might not be clear how much they have reduced your charges by, if at all.
Using a Financial Advisor to Combine Your Pensions
There is a strong case for getting help from an FCA-regulated financial adviser to combine your pensions. They will conduct a review of the plans you currently have and then advise you on your best options.
Companies that offer only a pension-combining service do not provide you with this level of insight. Instead, they are doing it as an administrative function rather than something geared towards boosting your pension funds. So, you could end up paying higher charges than you did previously.
Using an FCA-regulated financial adviser may incur a fee, but seeking their advice could leave you considerably better off in the long-term. An ILC study from 2019 concluded that people who received advice from a regulated financial advisor were much better off in the long-term. On average, these people accumulated more than £30,000 more in their pension pots than those who sought no financial advice.
Can You Combine the State Pension With Your Other Pensions?
It is not possible to combine the State Pension with any other pension plans you might have. The State Pension is a benefit provided by the government when you reach the qualifying age and meet specific qualifying criteria.
If you are fortunate enough to have multiple pensions, that’s an excellent position. Hopefully, this article will have demonstrated that combining them into a single plan might benefit your retirement even more, although you should always check your pensions to ensure this is the right thing for you to do beforehand.
If you are looking at options for your pension, consider using a regulated pensions specialist like Portafina or, view the info at Pension Wise.