4 reasons you should combine your pensions

17 July 2025

Are you looking for a way to manage your multiple pensions more effectively?

If you have worked for multiple employers or established various personal pensions over time, your retirement savings may be distributed across several pension pots. Although this is a common scenario, it is not always the most effective way to manage your retirement savings for the future.

This is why many investors consider pension consolidation. Combining your pensions into one central account, like a Self-Invested Personal Pension (SIPP), can be a beneficial step toward simpler, clearer, and more effective retirement planning.

In this article, we explore what pension consolidation is, how it might benefit your retirement planning, and how our expert Advisers can support your decision.

William Stevens

Partner, Head of Wealth Planning

What is pension consolidation?

Pension consolidation involves transferring several pension pots into a single pension scheme—typically a SIPP. Any funds you have are moved from your existing accounts to your new provider, so you manage your entire retirement savings from one place.

The types of pensions you can usually consolidate include:

Workplace pensions from past employers
Personal pensions
Other SIPPs with different providers

However, some pensions cannot be consolidated, such as government schemes like the State Pension. Also, it is not always appropriate to consolidate everything. You cannot typically move a defined benefit (final salary) scheme without seeking professional advice. If the value of your defined benefit pension exceeds £30,000, financial advice is a legal requirement before moving it.

The main aim of combining your pensions is to simplify your retirement planning and potentially help you align your investments more accurately with your retirement goals. Speaking to an Adviser is essential to assess whether consolidation into a SIPP is the right move for you, taking into account your unique financial circumstances.

Capital at risk

Please be aware that the value of your investments may fall as well as rise. The content of this blog post reflects our current understanding of UK legislation and only impacts those within the UK tax system. Tax treatment depends on personal circumstances, and the rules may be subject to future change.

What are the benefits of consolidating pensions?

There are many potential benefits that come with combining your pension pots. Here are four key reasons why you should consider consolidation:

A clear picture of your retirement saving

Keeping track of multiple pension pots can be more complex, whereas consolidating your pensions gives you greater visibility over your retirement savings, making it easier to build a financial plan to deliver on your future needs.

By consolidating into one account it is easier to more effectively monitor your investments, set goals and assess whether you are on course for retirement.

There will also be much less risk of losing any sums from older or smaller pension pots, since all your funds will be held in one place.

Easier management and reduced administration

The administration involved in managing one pension scheme is often significantly less than multiple. This means you will only have one annual statement, one account login, and paperwork associated with one provider.

One account also means one provider to contact to handle queries and adjustments, and one set of fees. This frees up more time and headspace to focus on what really matters – building wealth for the future.

Greater flexibility when accessing your pension

Consolidating your pensions into a SIPP can offer you better flexibility regarding withdrawal rules. When you reach retirement age – currently 55, rising to 57 by 2028 – a consolidated SIPP can give you a wider range of withdrawal options, whether that is tax-free cash lump sums, regular income, or a combination.

Also, a SIPP may help unlock improved retirement or death benefits, although this will depend on both the existing schemes and the one you consolidate into. For instance, if you die before age 75, your beneficiaries can typically inherit and withdraw from your SIPP tax-free. Professional advice is essential here to determine your unique situation and how tax might impact your wealth.

Wider investment options

Many workplace schemes offer a limited range of funds. When consolidating into a SIPP, you can gain access to a broader set of investment opportunities that can help you grow your savings in the right way according to your future goals and risk tolerance.

This can include assets such as shares, ETFs, bonds, and trusts, allowing you to tailor your portfolio to your goals and risk appetite so you can diversify more effectively.

What should I consider before consolidating pensions?

While consolidation can be beneficial, it is not always the right move for everyone. Here are some key things to keep in mind when looking to combine your pensions:

Potential exit fees

Some pension providers charge fees when you transfer your funds out. These exit fees, particularly with older schemes, can range from simple administration charges to significant reductions in the value of your savings, so it is important to weigh them against the benefits of consolidation.

Loss of benefits or guarantees

Defined benefit pensions often come with guaranteed income or other valuable perks, such as enhanced annuity rates or death benefits. Therefore, it is essential to assess how giving up these certain rare benefits might impact your position after consolidation – hence why financial advice is crucial.

Pensions transfer

Pension transfers can be complex and for some types of pension, you might wish, or be required, to take regulated advice about your options. This is particularly relevant for those with guaranteed benefits, such as defined benefit schemes and any other pensions with safeguarded benefits.

Potential tax implications

There are many potential tax implications to be aware of when combining your pensions, which you might be subject to depending on your specific circumstances.

If you are in ill health, transferring your pensions could affect your ability to draw certain benefits or pass funds on to beneficiaries. For example, if you die within two years after passing on a SIPP in ill health circumstances, the funds may be subject to Inheritance Tax (IHT) charges.

Also, inherited pensions after age 75 may be subject to Income Tax at the marginal rate. This makes it all the more important to speak to an Adviser before making any consolidation decisions.

It may not be right for everyone

For some, the potential drawbacks – such as exit charges or lost guarantees – might outweigh the simplicity and advantages of consolidation.

While larger, consolidated pots may be more cost-effective, smaller pensions with low fees and decent performance may be better left untouched.

Ultimately, the decision to consolidate should come down to a thorough assessment of your financial position and retirement goals with an expert Adviser. Our Killik & Co Wealth Planning team will provide the tailored guidance needed to determine whether consolidation is right for you, or alternatively, you can use free guidance services such as Pension Wise to make an informed decision.

Capital at risk

What if I cannot find my pensions?

It is common to lose track of old pensions, especially after job changes, and you will need these details if you want to consolidate.

Some steps to help you find your old pensions are:

List all the places you have worked for
Check any old paperwork or contact your employer to gather pension provider details
Use a pension tracing service or contact the provider directly
Give the provider as much information as possible in order to match you to a pension – such as your National Insurance Number, addresses, employment dates, etc.

Is my money safe in one pension?

Consolidating into one pension can seem like “putting all your eggs in one basket”. This is why pension protection can be vital.

Pension money in the UK can have different types of protection. The Financial Services Compensation Scheme (FSCS) protects any cash held in your pension provider’s bank account up to £85,000. However, this is cash only, and underlying investments have their own protection depending on the investment provider and the capital value of the asset.

UK pension schemes are also regulated by the Financial Conduct Authority (FCA) and usually run under a trustee structure. This means your pension assets are kept separate from the provider’s business, and these layers of regulation and governance help keep your money secure.

Should I consolidate my pensions?

Deciding to consolidate your pensions is a big step, and one that can potentially transform your retirement planning into a more seamless and effective way to build wealth towards your goals.

However, the decision to combine your pensions depends on your specific circumstances and the several factors involved. Combine your pensions into Killik & Co’s award-winning SIPP to give you access to expert support throughout consolidation – and beyond – a wide range of investment opportunities, and a tailored strategy for your future. Speak to one of our Wealth Planners today to get started.