Pension Consolidation in the UK: Should You Combine Your Old Pots?

If you’ve had a few jobs over the years, chances are you’ve picked up multiple pensions along the way. Between workplace pensions, personal pensions, and auto-enrolment schemes, it’s easy to lose track. That’s where pension consolidation comes in.

But is combining your old pension pots a smart move—or a risky one?

This guide walks you through the pros, cons, and how to decide whether consolidating your pensions is right for you.

What Is Pension Consolidation?

Pension consolidation means transferring multiple pension pots into a single plan—typically a modern pension with more visibility, lower fees, and better investment options.

You might consolidate:

• Old workplace pensions
• Personal pensions or SIPPs
• Auto-enrolment schemes from previous jobs

It’s increasingly popular in the UK as people move jobs more frequently and want to simplify their retirement planning.

The Benefits of Pension Consolidation

1. Easier to Manage

Fewer accounts = less paperwork and admin. You’ll only need to track:

• One provider
• One investment strategy
• One set of statements

2. Potentially Lower Fees

Older pensions often have higher management charges or hidden fees. Modern providers (like PensionBee, Vanguard, or AJ Bell) tend to offer lower-cost plans.

Even a 1% fee difference could cost you thousands over the lifetime of a pension.

3. More Control and Visibility

Modern platforms offer online dashboards, mobile apps, and flexible investment choices, helping you stay in control of your pension.

4. Avoid Losing or Forgetting Pensions

It’s surprisingly common to lose track of small pots. Consolidating can ensure all your savings are accounted for and invested wisely.

The Risks & When Not to Consolidate

1. Losing Valuable Benefits

Some older pensions offer:

• Guaranteed annuity rates
• Protected tax-free cash amounts (more than 25%)
• Early retirement options

If you consolidate these, you could lose these benefits permanently. Always check with your provider before transferring.

2. Exit Fees

Some pensions charge to leave. If the cost is high, it might outweigh the benefits of switching.

3. Timing and Market Conditions

If markets dip just as you transfer, your pension might lose value. While this isn’t usually a longterm issue, it’s worth timing carefully if possible.

How to Start Pension Consolidation

Step 1: Track Down All Your Pensions

Use the Pension Tracing Service to find details of lost or forgotten pensions.

Step 2: Request a Statement or Valuation

Contact your providers for a current balance, charges, benefits, and whether there are any exit penalties.

Step 3: Compare Your Options

Look at:

• Charges (management fees, admin fees)
• Investment choices
• Customer service and online access

Consider consolidating into a:

• Self-Invested Personal Pension (SIPP)
• Online pension platform (like PensionBee, Moneybox, AJ Bell)

Step 4: Get Advice if Needed

If you’re unsure—especially if the pot is large or includes special guarantees—consider speaking with a regulated financial planner.

By law, you must get financial advice if you’re transferring a pension with safeguarded benefits
worth over £30,000.

Case Study: What Pension Consolidation Could Save You Sarah, aged 35, had three old workplace pensions:

• £12,000 with 1.2% annual fee
• £8,000 with 0.9% annual fee
• £15,000 with 0.7% annual fee

She consolidated all three into a new plan with a 0.3% fee. Over the next 30 years, that small
change could mean tens of thousands more in her pot by retirement, thanks to compounding and
lower fees.

Consolidation and Auto-Enrolment

Each time you change jobs, a new workplace pension is likely to be opened. While you can’t merge an active pension scheme (one you’re currently paying into) with your own SIPP, you can:

•  Let older schemes stay where they are
• Or periodically consolidate them into your main pension

When Should You Consolidate?

Yes, consider consolidating if:

• You have small pension pots you’re no longer contributing to
• Your old pensions have high fees or limited options
• You want more control and easier access

Avoid consolidation if:

• You have valuable guarantees (e.g. defined benefit or annuity rates)
• There are significant exit penalties
• You’re unsure—get advice first

Final Thoughts: Simplicity, with Caution

Consolidating pensions can tidy up your finances, reduce fees, and improve your long-term returns—but it’s not always the right move. Always check what you’re giving up before you transfer, and don’t be afraid to ask for advice.

Quick Takeaways:

• You can combine old pensions into one pot for simplicity and savings
• Check for guarantees, penalties, and fees before transferring
• Consider platforms like PensionBee, Vanguard, AJ Bell or Quilter
• You may need to take advice, especially for pensions with safeguarded