Over the course of a working life, it is easy to accumulate several different pensions.
You might have a workplace pension from your current employer, another from a job you left 15 years ago and perhaps one or two personal pensions set up along the way.
Individually, you may receive an annual statement for each. But do you know what they are worth collectively? More importantly, do you know what they could provide when you retire?
For many people approaching retirement, the answer is not as clear as they would like.
As retirement moves from something in the distant future to a more immediate priority, understanding what you have – and whether it is enough to support the retirement you want – becomes increasingly important.
Why do we end up with so many pensions?
Changing jobs is a normal part of working life, and each move can leave another pension behind.
The pension does not disappear when you leave an employer. In most cases, it remains invested and continues to be managed by the pension provider. Over several decades, however, this can leave you with multiple policies, providers, statements and sets of charges to keep track of.
You may even have lost track of an older pension altogether.
This can make retirement planning unnecessarily difficult. You might know roughly how much is held in one or two pensions without knowing the combined value of everything you have accumulated or the income it could potentially provide.
That uncertainty can become more significant as retirement approaches.
The first priority is understanding what you have
Before considering pension consolidation, we believe it is important to establish the complete picture.
That means identifying your pensions and understanding their current values, charges, investments, benefits and the options available when you retire.
There are two main types of workplace pension – defined contribution pensions, where your eventual retirement income depends on factors including contributions and investment performance, and defined benefit pensions, which generally promise a retirement income based on the scheme’s rules.
Understanding which type you have is particularly important because they work very differently.
Once all your pensions have been considered alongside your other savings, investments and expected State Pension, you can begin answering the questions that really matter:
- What could my retirement income look like?
- When could I realistically afford to retire?
- Is my current level of saving sufficient?
- How should I take an income from my pensions?
- Could my existing pensions be working more effectively?
- What could happen to my pensions when I die?
For many people, simply gaining this clarity can make retirement feel considerably more manageable.
Should you consolidate your pensions?
Pension consolidation means transferring some or all of your existing pensions so that they are held together within one pension arrangement.
There can be advantages.
Having fewer pensions can make your retirement savings easier to monitor and administer. Depending on the pensions involved, consolidation may also provide access to different investment choices, potentially lower charges or more flexible options for taking retirement income.
But consolidation is not simply an administrative exercise, and it is not automatically the right decision.
Some older pensions include valuable benefits or guarantees that could be lost permanently if you transfer. These might include guaranteed annuity rates, bonuses or a protected pension age. There can also be exit charges or other implications to consider.
Defined benefit pensions require particular care. Transferring one into a defined contribution arrangement means giving up the promise of a guaranteed retirement income, and regulated financial advice is generally required before transferring safeguarded benefits worth more than £30,000.
The objective, therefore, should not be to combine pensions simply for the sake of having everything in one place.
It should be to understand each pension and determine how it fits into your wider retirement plan.
Pension planning is also changing from April 2027
There is another reason why reviewing pensions has become particularly timely.
From 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of an individual’s estate for Inheritance Tax (IHT) purposes. The change was legislated for in the Finance Act 2026 and will apply to deaths on or after 6 April 2027. There are exclusions, including death-in-service benefits from registered pension schemes and certain dependant’s scheme pensions.
This represents an important change for estate planning.
Pensions have traditionally played a particular role when considering how wealth might eventually pass to the next generation. From April 2027, families with larger estates may need to reconsider how their pensions fit alongside property, investments, savings and other assets when planning their estates.
It does not necessarily mean that you should withdraw money from a pension, consolidate your pensions or make immediate changes because of IHT. However consolidation could be beneficial for your executors when you die because under the new rules they will have to deal separately with each pension provider to determine how much, if any, IHT has to come out of each pot. So if you have consolidated multiple pensions into one it will make this a lot easier.
Looking beyond the pension pots
Good retirement planning is about more than arriving at a total pension value.
Two people with exactly the same amount saved could require very different plans.
One might want to retire at 60 and travel extensively during the first decade of retirement. Another may plan to continue working part-time, help children onto the property ladder and prioritise leaving an inheritance.
The right approach depends on your circumstances, objectives and the life you want your money to support.
That is why bringing your pensions together on paper – whether or not you ultimately consolidate them – can be so valuable.
Once you understand what you have, you can start modelling what different retirement dates and income levels could mean for you. You can consider how pensions work alongside ISAs, investments, cash and other assets, and you can make informed decisions about how and when to use them.
Approaching retirement? Now is a good time to get organised
If you are in your 50s and have collected several pensions during your career, you do not need to wait until your planned retirement date to start making sense of them.
The earlier you understand your position, the more time you have to make considered decisions.
We help clients bring together the different elements of their finances to create a clear picture of where they stand today and what their future could look like.
We can review your existing pension arrangements, help you understand what they could provide and consider whether consolidation is appropriate. Crucially, we look beyond the individual pension pots to consider your retirement income, investments, tax position and estate planning as part of one joined-up financial plan.
If you would like greater clarity about your pensions and what they could mean for your retirement, get in touch with our team to arrange an initial conversation.
The value of investments can fall as well as rise and you may get back less than you invest. Pension and tax rules can change, and the tax treatment applicable to you will depend on your individual circumstances. This article is for general information only and does not constitute personal financial advice.