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Should you consolidate your pensions?

consolidate your pensions

Midsection of businessman holding piggy bank with pension written on it

If you’ve collected various pensions from different employers over the years, then you may be finding it hard to keep track of what’s what.  Consolidating your pensions may seem like a good idea so you can get everything in one place.


There are advantages to consolidating your pensions and in some cases, it is the best decision.  There are also some pitfalls so you should seek professional advice before you decide.

If you are in a final salary pension scheme then it is nearly always best to stay with it, although there are certain aspects of these schemes that may make it worth exploring your options.  For any other pensions consolidation might be worth considering.  The decision will really depend on what types of pension you have and how long you have left until you retire.

A well invested pension can make huge differences to your lifestyle in later life compared to poor performing pension pots or those with expensive charges.

If you are thinking of consolidating your pension then you may have looked at the idea of a self-invested personal pension (SIPP).  These are designed to give you more control as you can choose how your pension is invested and manage it yourself.  However, it can be hard making these big decisions and if you don’t feel confident then you should get independent advice or consider letting someone manage it for you.

Consolidating pensions

Although there are benefits to consolidating you do need to be careful. Some pensions have extremely high exit penalties or a market value reduction. These can be high, especially on older pensions, so check the terms before making any decisions. If there is a high fee it may still be worth consolidating as it may be possible to recoup these costs through the improved investment performance of a better pension.

If you are nearing retirement then you may not have enough time left before you retire to recoup the costs but it may be still be worth considering consolidation. It could benefit you having your entire pension in one place ready to buy an annuity or put into an income drawdown.

You should also check any other benefits of your current pensions such as guaranteed annuity rates or any life insurance that is included, as these could add value that you might not get with a new pension.

If you have multiple pensions then it is advisable to seek professional advice. An independent financial adviser will be able to review all of your pensions and tell you which are performing well and which it would be beneficial to switch or consolidate. They can also advise on the best pensions to switch too, based on your individual circumstances.

At Rockwood we’re passionate about pensions and can help you understand what your options are. Whether you have one or several pensions we can review them for you and explain the advantages and disadvantages of consolidation. If you do decide to switch or consolidate we can help you chose the pension scheme that is right for you. This will be based on your circumstances now and the lifestyle you want to achieve in the future. All of our advice is completely impartial.  If you’d like advice on existing pensions or setting up a new pension then we’d love to help. Contact us today to start making the most out of your pensions now.

Nothing in this blog constitutes financial advice or recommendations, for more information please contact Rockwood Financial Solutions on 0330 332 2679.