Working with a financial adviser is the best way to ensure you successfully consolidate your pensions for a secure future in retirement and beyond.

What is pension consolidation?

Pension consolidation is when you transfer or combine several pension pots into one. If you've had more than one employer, it’s likely that you have multiple pensions. Since each pension scheme comes with its own regulations and benefits, combining them is a good way to gain control over your pension savings.

Information - Investment involves risk. The value of investments can fall as well as rise. You may get back less than you originally invested.

Should I consolidate my pensions?

Some advantages of consolidating your pension:


Consolidating your pension makes it easier to track and provides you with a single pension payment, rather than several smaller payments. Having your pension in one place also allows you to align your retirement goals more appropriately.

Greater accuracy

Consolidating your pensions offers you a more accurate forecast on your performance growth, making budgeting easier.

Reduced charges

By consolidating your pension into one pot, you no longer have to pay management fees on multiple schemes. However, the majority of plan fees are based on the plan value, so you need to move to lower-charged funds to avoid your savings on charges being less than you might have anticipated. If you are moving from a more basic plan to one with more features, these may carry a higher charge because of that.

Better growth opportunities

When you have multiple pensions, some will perform better than others. Consolidating your pension gives you an opportunity to increase your performance rate but you cannot guarantee that post consolidation will be better, albeit it will be easier to align your investments to the amount of risk you are prepared to and can afford to accept.

Increased investment options

In the process of pension consolidation, you can either stay with your one of your existing pension providers, move to a new one or decide to open a self-invested personal pension (SIPP). When weighing up what each option offers, you may find better investment opportunities or benefits. Moreover, with changes to pension legislation in the last few years, newer pension schemes could offer greater flexibility and freedom when accessing your money. However, when looking at your options, consider carefully the features and options you need and will use. There is no point in paying for extra ‘bells and whistles’ that you won’t use if you don’t need to.

Risk profile changes

Do your previous pensions held match your current selected risk profile? Are you taking too much or too little risk, or don’t know? A consolidation exercise will allow you the opportunity to ensure your plans are in step with your preferred risk level.

Are there any reasons not to consolidate pensions?

Forfeiting guaranteed income

Before consolidating your pension, check if any valuable investment or annuity rate guarantees could be forfeited if you transfer your pension - especially with older pension schemes. For example, a Defined Benefit pension, also known as a ‘final salary pension’, is a type of workplace pension that pays you a retirement income based on your salary and number of employment years. These also often come with some degree of inflation protection.  When this pension is transferred and re-invested into a Defined Contribution plan, you forfeit the benefit of guaranteed income from your employer.  For these reasons, the financial regulator, the Financial Conduct Authority, state that for most people a transfer of Defined Benefits would not be in their interests.  It is a requirement to take professional advice where the transfer of ‘safeguarded rights’ (essentially guaranteed income arrangements like Defined Benefit schemes) is worth £30,000 or more.

Market value adjustment (MVA) penalty

For contracts using ‘With Profits’ investments, take note of a potential market value adjustment (MVA) penalty. The early withdrawal of your pension in order to transfer it during pension consolidation could cause this penalty fee to be applied and these can be substantial outside of any instances where it won’t be applied by the provider e.g. at the plans stated retirement age

Exit fees

When exiting a pension scheme and transferring the funds, you may incur hefty exit fees. Exit fees are either charged at a flat rate or as a percentage of your total pension pot value - determined by your pension provider. It’s also essential that you take tax into account. If the combined value of your pension pots exceeds the tax-free lifetime allowance (currently set at £1,073,100), your pensions are at risk of being taxed benefits are taken.

Bear in mind that tax rules can change and their impact on you will depend on your circumstances.

How can Ascot Lloyd help you with pension consolidation?

Our advisers offer professional, on-demand advice on pension consolidation and other important steps towards planning for your retirement.

Being independent allows us to have access to a wide range of pension products and schemes on the market, which gives us the flexibility to implement the right tax-efficient investments for your desired pension plans.

From assessing your unique situation and putting a tailored financial plan in place to helping you get the most out of your pension - rest assured knowing your adviser will take care of the entire pension consolidation process. 

Need help consolidating your pensions?

If you’re planning to consolidate your pension, don’t hesitate to contact our expert advisers. If you’re also looking for assistance on choosing the right pension scheme, maximising contributions or managing existing pension pots, Ascot Lloyd can help you.

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Frequently asked questions

How long does it take to combine pensions?

The entire process of pension consolidation is usually 2 to 4 weeks from when providers are instructed. However, when it comes to transferring pensions for consolidation, some pensions are more complex than others and could take longer to complete for example in the case of Defined Benefit Transfers. The timeframe also depends on whether the pension transfer is cash only, or if it is getting transferred as an investment.

Can you combine pensions with your partner?

The short answer is no. You cannot combine your pension pot with those of your spouse. However, in certain circumstances, you may be allowed to transfer your pension to another individual. This is relevant in cases of divorce, settling a civil partnership or in the event of your death whereby a named beneficiary may inherit your pension.  It is good practice to ensure that your provider is aware of your nomination preferences and to update these if your circumstances change or have changed.