Combine Your Pensions with the Right Financial Adviser

Combining pensions — also called pension consolidation — means bringing multiple pensions together by transferring them into a single provider or scheme. You choose which ones to combine and which to keep separate; there’s no requirement to move everything.

Moving some and leaving others is sometimes called partial consolidation, and it’s a common outcome once someone has looked properly at what they hold.

There can be risks. The main ones include:

• Losing features or guarantees on your existing plans
• Exit charges on the schemes you leave
• Being out of the market while the transfer completes
• Moving to a scheme with higher charges than you realised
• Consolidating into one investment approach that suits you less well than what you had.

Transfers are also a common target for scams. Never move a pension because of a cold call, visit, email or text — you could lose the money and face a large tax bill.

You might. If the scheme you’re transferring to doesn’t offer the same features as your existing pension, those features are lost when you move.

The ones worth checking for include guaranteed annuity rates, protected tax-free cash above the usual 25%, enhanced death benefits and protected early retirement ages. Older plans are the likeliest to carry them, and they’re rarely spelled out on an annual statement. Asking each provider directly — or having an adviser do it — is the only reliable way to find out.

It varies by scheme and provider. Straightforward defined contribution transfers between modern providers can complete in a few weeks while older schemes and paper-based administration take longer.

Defined benefit schemes involve an extra step: you’ll need a cash equivalent transfer value from each provider, which they have up to three months to produce and which is usually valid for three months once issued.

Combining isn’t automatically right, and there are cases where it usually isn’t:

• Your pension carries a guarantee you can’t replace elsewhere
• Exit charges outweigh what you’d save
• Your current workplace scheme is receiving employer contributions and moving it may stop them
• The scheme does not permit the proposed transfer.

An adviser will tell you when leaving things as they are is the better answer.

Not always. For a couple of straightforward defined contribution pots with no special features, plenty of people transfer without advice.

Advice becomes far more important where guarantees might be in play, where the amounts are significant, or where you’re not certain what type of pensions you hold. Transferring is difficult to undo once done, which is what separates this from most retirement decisions.

Financiable® does not provide financial advice or recommendations. We introduce you to advisers who provide regulated advice through FCA-authorised firms, and the initial consultation is free with no obligation to proceed.