Consolidating pensions

Having pensions scattered around can make it hard to get a picture of how your retirement savings are looking. Putting your pensions in one place can help.

This page walks you through how to consolidate pensions, and the ways it could make managing your investments easier.

Is consolidating pensions a good idea?

Consolidating pensions is when you move the pension pots you’ve built up over your working life to one place. Though there are lots of advantages to doing this, there are disadvantages too.

Some of the advantages of transferring pensions into one pot, like an AJ Bell Self-invested personal pension (SIPP) or Ready-made pension, include:

• Less admin and paperwork

One pension account means fewer statements and paperwork to deal with, and only one online log in.

• Potentially lower charges

If you combine your pensions into a plan that offers better value, you can end up paying far less in charges over time – meaning you’ll keep more of any investment returns.

• Investment choice to suit you

A SIPP usually has a far greater investment choice than other types of pension, if you’d like to choose and manage your own pension investments yourself. With a Ready-made pension, you can choose from four AJ Bell growth funds, managed by our in-house experts.

• Easier management

Your retirement savings will all be in one place, making it easier to check your pension and investment strategy is on track. With a Ready-made pension, any money paid in (including eligible pensions you find) will be automatically invested for you, into your chosen AJ Bell fund.

• More options at retirement

A SIPP offers greater choice about how you can access your pot at retirement than other pension types. But keep in mind that our Ready-made pension is designed for people building up their savings, not those at or near to retirement.

When should I combine my pensions?

You can consolidate pension pots whenever you like. But there are times when it may make more sense – such as if you’ve changed jobs, or if you’re thinking about the timing of your retirement plans or what you’ll want from your pensions in the future.

Before you start combining pensions, you should check that your existing pensions don’t have any valuable guarantees or benefits you’d lose if you moved them. Our checklist below tells you what you need to ask before getting started. Our free Pension finder tool will tell you if any old employer pensions you find contain any guarantees or valuable benefits.

Episode 12: Transferring and consolidating pensions

Our experts discuss the benefits of combining your old and lost pensions into one single pot – easier management, less administration and paperwork, and smaller charges.

Listen to our Investing Essentials podcast

How do I consolidate my pensions?

Before you can consolidate your pensions, you usually need to make sure you have all your policy documents and details to make a transfer.

Given that the average person changes jobs 11 times, that's a lot of different pensions to keep track of. If you're not sure where all your old pensions are, you're not alone. According to the Pensions Policy Institute in 2022, as much as £26.6 billion is sleeping in lost or forgotten UK pensions.

It's why more and more people are trying to find their lost pension. And it’s why we've launched a service that does all that for you, for free: the AJ Bell Pension finder.

To get access to the service, you need to be an AJ Bell customer.

Your three steps to finding lost pensions

If you’ve chosen a Ready-made pension, any eligible pensions will be transferred across and invested for you into your chosen AJ Bell fund. If any pensions you’ve found have guarantees, you’ll need to read and consider some extra information before deciding whether to combine them. If you’ve chosen to open a Self-Invested Personal Pension (SIPP), you can choose whether to combine each pension you’ve found.

If you'd prefer to find your pension details yourself, the government’s free Pension Tracing Service may be able to help. Visit the website or call 0345 6002 537 for more information.

If you're lucky enough to have all your old pension details, you can get started straight away. Opening a SIPP with us only takes around 10 mins. During your application, you'll be asked for details of the pensions you would like to transfer. Once we have those details we'll contact your current pension provider(s) to get the transfer started.

Pension consolidation checklist

Before you move a pension, it's important to make sure you won't lose money, or any valuable benefits by doing so.

Here’s what you should check with your current provider:

• Will you be charged an exit penalty or face a market-value adjustment (MVA)?
• Will you lose any valuable benefits? Examples include a guaranteed annuity rate, the right to take more than 25% of your fund tax free, or a pension paid to your spouse when you die.
• Does your employer pay into your existing pension, and if so, will they pay into a SIPP? A Ready-made pension doesn’t accept employer payments.
• Do you have a defined benefit (also known as ‘final salary’) pension, which guarantees a lifelong retirement income? If so, you’re probably better off not moving. If the transfer value is £30,000 or more, you’ll need to get financial advice. To transfer a defined benefit pension to AJ Bell, both you and your adviser need to complete a declaration form.

Remember that if you do decide to combine all of your pensions, how you transfer them is important. Selling your investments first to transfer as cash means you’ll be out of the market, and could lose out on potential gains. You can transfer investments to an AJ Bell SIPP directly, without selling them first, as long as your current investments are available on our platform. With a Ready-made pension the assets will be sold so that they can be invested in your chosen AJ Bell fund.

If you’re still unsure on what to do with multiple pensions, you should seek professional financial advice. Alternatively, you could look at the resources offered by the free government-backed service, MoneyHelper.

Open a SIPP

An AJ Bell SIPP gives you complete flexibility on how much you save for retirement, and allows you to decide when and where your pot is invested.

More on SIPPs Open an account

Options at retirement

You've saved hard for your retirement, but once you get there, what are your options?

See retirement options