Ask the Experts: Should I consolidate my three pensions into one pension pot?

13 December 2017


I am 45 years old with three different pension pots. One is worth around £7,500, the other around £15,000 and the final one around £115,000. I’ve recently moved jobs, but need to serve a six-month probation before I get the 8% pension contributions on offer at the new firm, made up of a 3% contribution by myself and 5% from the company. The four pensions I will have are with three different providers. My question is should I consolidate them into one pension pot? 



Many people are keen to consolidate their pensions, and this is something which is heavily promoted by product providers. However, remember that they have a vested interested in you transferring to them as they want to have more of your money in their pensions and on their platforms.

The big advantage of consolidating your pensions is that you will have everything in one place, which makes administering your pension easier. This should give you more control over reviewing your investments, making any changes and understanding the level of pension you are on target to achieve.

However, there may be costs involved in transferring your pension, including exit penalties imposed by your existing providers. You might miss out on investment gains if you’re out of the market while the transfer takes place. You might move to a more expensive or less flexible pension, and you could even lose valuable guarantees such as guaranteed annuities.

There are even bigger risks if you transfer out of a final salary pension scheme to consolidate your pensions, as you’ll be giving up guaranteed benefits and taking on greater risks.

You should review all your pensions and make sure you understand the charges, terms and conditions for each of them. This will give you a better idea whether consolidation is a good idea. These are important decisions and so if you’re uncertain of what the best course of action is, then you should take independent financial advice. 

Patrick Connolly is a certified financial planner at Chase de Vere. Find out who our experts are on the Ask the Experts homepage.

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