Multiple pensions? 5 key reasons you might benefit from consolidating them into one

Sunday 26 October is National Pension Tracing Day. Founded and sponsored by some of the UK’s biggest financial firms – including Aegon, Scottish Widows, and Standard Life – the annual event encourages UK savers to trace pension pots they may have lost during a busy working life.

There are several reasons you may have lost track of pensions. For example, you may have changed jobs and forgotten to transfer your pension savings, or moved house and never quite got around to telling your pension provider your new address.

If either of these is ringing bells for you, you’re not alone.

Indeed, the Pensions Policy Institute estimates that there are roughly 3.3 million lost pots, with missing assets worth approximately £31.1 billion.

While the amount of missing retirement savings varies, Brits aged between 55 and 75 are likely to have lost an average of £13,620.

Keep reading to learn how to recover lost pensions and five reasons you may benefit from consolidating multiple pensions into one easy-to-manage fund.

It’s usually pretty straightforward to track down your lost pensions

If you think you may have lost track of some of your pension savings during your career, the government’s Pension Tracing Service could be a good place to start.

Simply enter the name of your employer or pension provider, and you’ll get up-to-date contact details for the relevant scheme. Then, you can write or call to confirm whether you have an account and request a statement of your savings.

Once you’ve gathered details of your different pensions, you’ll have a clearer picture of where your retirement savings currently sit – and you’ll be able to consider whether consolidating them could make sense for you.

5 potential benefits of consolidating multiple pensions

1. It will be easier to manage your retirement savings

If you’ve worked for several employers, chances are you’ve also accumulated several pension pots. Keeping track of each one – including its balance, fees, and investment performance – can be time-consuming.

Combining multiple pensions into a single pot could make life simpler, as you’ll only have one provider, one set of paperwork, and one account to keep an eye on.

This can make it easier to check your progress towards your retirement goals and ensure your money is invested appropriately.

2. You could have more investment options

Workplace or personal pensions that you’ve had for many years might offer limited investment choices.

Transferring to a modern pension could give you more fund options to choose from. Many providers also offer ESG funds that may better align with your values.

If in doubt about how to invest your pension, we can help you build a retirement investment strategy that’s aligned with your long-term financial goals.

3. You might see improved performance

As well as potentially high charges, your pension pot might be invested in funds that aren’t appropriate for your needs.

By getting to grips with all your pension pots, you can take steps to ensure your investment choices match your long-term goals.

As your retirement plans evolve and you approach your chosen retirement date, your investment strategy will need to adapt.

This means that the funds you chose when you were 30 – when retirement was still decades away – may no longer be the most suitable options.

4. You could save on pension fees

Every pension provider charges fees for managing your money. These may include annual management charges, fund costs, or administration fees – and the amount charged can vary significantly between providers.

High fees can eat away at the value of your fund. Over the long term, this could dramatically reduce the value of your pension pot. As such, even seemingly small reductions in charges could make a big difference to the balance of your retirement savings.

5. It could give you greater flexibility when you retire

Since the introduction of pension freedoms in 2015, you have more choice over how and when you access your retirement savings.

Some older or workplace pensions may restrict how you can take your money or require you to purchase an annuity. Consolidating into a modern pension could give you greater flexibility when planning your retirement income.

Consolidating pensions may not be the right choice for you

Before you plough ahead and start combining all your pensions, there are a few drawbacks that may affect your decision.

1. You may be charged a fee to transfer

Some pension providers charge exit or transfer fees when you move your savings elsewhere.

Although these charges have become less common, they may still apply to certain older plans. We can help you understand whether this applies to you.

It’s also important to note that some pension providers won’t accept a transfer unless you’ve sought professional advice from a financial planner – regardless of potential exit fees.

2. You may forfeit valuable benefits

A few older pensions – especially defined benefit (DB) or final salary schemes – come with valuable guarantees or benefits. If you transfer out, you’ll lose these protections and any associated features.

For example, you could be giving up a guaranteed income for life, a generous spouse’s pension, or enhanced tax-free cash entitlements.

These benefits can be extremely valuable, so it’s vital to speak to an independent financial planner before making any decisions.

3. A larger pot might mean you have to pay more tax on withdrawal

If you consolidate all your pensions into a single large pot and want to take all your benefits in one go at retirement, you may end up paying more tax.

Aside from the 25% tax-free entitlement, pension payments you receive are taxed as income and subject to Income Tax.

Taking a lump sum beyond the 25% allowance could push you into a higher tax bracket. This may result in part of your pension payments being subject to tax at rates of 40% or 45% (2025/26).

We can help you plan withdrawals in a tax-efficient way and make the most of your available allowances.

Get in touch

At Logic Financial Services, we can help you trace lost pensions, assess your existing pots, and decide whether consolidating multiple pension pots is right for you.

Please email info@logicfinancialservices.co.uk, call 01491 612 754, or drop into the office.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.