Combine your old pensions – advantages and disadvantages

If you’re a professional working via your own limited company, it’s highly likely that you have spent time working for a number of employers during your working life.

You may have contributed to several occupational pension schemes in the past. You may also have made contributions to a personal pension plan too.

In fact, it isn’t unusual to have 4, 5, or possibly more separate pensions.

Although this isn’t necessarily a problem – each pension may offer competitive returns – a growing number of professionals are opting to consolidate their disparate pensions into a single easy-to-manage scheme.

Pension consolidation growing in popularity

In this article, we look at what pension consolidation involves, and the pros and cons of combining your old pensions.

Before we look at the advantages and disadvantages of consolidating older pensions, if you have a final salary scheme – in almost all cases, there will be no benefit in moving your pension.

It is also mandatory to seek professional advice if you are considering transferring out of a pension scheme with safeguarded benefits if the value of the pot is £30,000 or more.

In the majority of other workplace pensions – where performance is based on the success of investments (minus the impact of scheme charges), you might consider moving your pension to a single consolidated plan.

It goes without saying that you should always seek professional advice before making any changes to your pension arrangements, as even small changes now may have a significant impact on your pension returns when you retire.


  • You will be able to access one single, web-based, online pension plan, rather than dealing with a number of separate, often hard-to-understand plans.
  • You will have a lot more control over your pension, including choosing the type of funds you want to invest in, and the level of risk you are willing to consider.
  • You can set up and change your contributions via an app, or online, and decide whether to make contributions direct from your limited company, or using post-tax personal income. You can make changes with ease.
  • Your pension plan fees may be significantly reduced, particularly if you opt to consolidate with one of the cutting-edge progressive pension providers.
  • You will have a clear overview (in real time) of how much your pension is worth, and how your investments are affected by current market conditions.


  • Some pension schemes may charge exit fees should you choose to move away.
  • If you have a final salary (defined benefit) pension, you’re very unlikely to benefit by converting this plan into a consolidated one. Final salary pensions are rare and very beneficial plans, which provide a guaranteed income, unaffected by the global markets. You’re better off keeping these plans where they are.
  • If one of your pensions has a guaranteed annuity rate (GAR), this is typically another red light to transferring out. If you have a plan with a GAR, this means you will be able to buy an annuity at a pre-determined rate, way above those offered on the open market. This type of plan was popular in the 1980s and 90s.
  • You may be concerned about moving all of your plans into one single plan – putting all of your risk into one single scheme. (‘all of your eggs in one basket’). However,  this concern may be offset by choosing a balanced portfolio.
  • If you choose an IFA to help consolidate your pensions, how much will they charge for their advice and help? You need to offset any charges against the risk of consolidating on your own. Good-quality professional advice may pay for itself many times over.

Be prepared in advance

Before you do anything, take some time to gather together the paperwork relating to your existing pensions.

If you can’t easily locate these details, you can either get in touch with your former employers and/or use the Government’s own pension locator service.

Consider taking professional advice before doing anything, as any actions you take now could have a significant impact on the money you receive at retirement.

Tax-efficient protection for directors

  • limited company life cover