Combining pensions in one place can reduce administration and be cheaper.
But this is not always advisable as you risk losing valuable benefits if you leave an old scheme. You may find it worthwhile to build up some old pensions together, but leave others alone.
Here’s what to check before making a decision.
1. Reimbursements for old and new pension schemes
You should check the costs as they can put a serious dent in your future returns.
2. Where are your pensions invested?
Past returns are no guide to the future, but you should investigate where your money is being kept. Read our guide to carrying out a health check on investments.
3. A private provider versus your work arrangement
Pension consolidation companies have emerged to help people manage all or most of their pensions in one place, and this can be both cheaper and more convenient.
However, your current workplace arrangement has also likely used its size to negotiate lower compensation.
Transferring your older pensions to your existing company pension may be the most convenient option, especially if you want to cut back on administration.
4. Guaranteed Annuity Rates
If these are high, it may be worth holding on to an old pension and using it to purchase an annuity.
You must get paid financial advice to transfer a pension worth £30,000 plus a GAR.
5. Guaranteed fund returns
These are rare, but it’s worth checking the fine print to see if they benefit you.
6. Larger lump sums
Some older company pensions allow you to take a tax-free lump sum of more than the usual 25 percent.
7. Major exit fines
Most standard working pension funds today are trackers with cheap rates. If you have a precious old pension with limited investment choices, you may want to weigh the benefits of moving despite the penalties.
From the age of 55, the exit costs are limited to 1 percent.
8. Ongoing employer contributions
You get free employer contributions in your current work scheme, and you don’t want to lose the money that goes into your pot.
9. Protected retirement ages
It depends on the scheme rules, so check them, but you may not want to lose the chance of a pension at age 50, especially if you have some that start later.
10. Final salary pensions
Outside the public sector, generous final salary pensions, which pay a guaranteed income until you die, plus valuable death benefits for surviving spouses, have been virtually wiped out.
They are the most generous and safest pensions available. You are required to take paid financial advice if your transfer value is more than £30,000, which is a long-standing safeguard against making mistakes that you can’t take back later.
> Do you need to merge your pension pots? Read our full guide