How to consolidate and combine pensions

# What pension consolidation is

# Which pensions you can and can't combine There are two broad types of private pension mentioned:

• Defined benefit (DB) or final salary pensions: these pay a guaranteed income based on salary and service and are often linked to inflation. They are not commonly transferable. If a DB pension is worth £30,000 or more, regulated financial advice is required before you can transfer it.

• Defined contribution (DC) pensions: these include workplace pensions, auto-enrolment pots, private personal pensions and SIPPs. DC pots are usually transferable so you can consolidate them if you decide it's right for you.

# Why people consolidate Consolidation reduces the number of places you must check and can lower total costs if your existing pots charge higher fees than the chosen receiving scheme. It also makes it easier to manage investment choices and withdrawals in retirement. But consolidation isn't always better: charges, loss of guarantees, or poorer investment options could make staying put preferable.

# Practical steps to consolidate pensions

1. 1Identify where all your pots are held. Use paperwork, online accounts and any tracing services to list every pension.

1. 1Check the type and value of each pot. Confirm whether a pot is DB or DC and whether any transfer restrictions apply.

1. 1Compare charges and investment options. Look at ongoing provider fees and underlying fund fees. Factor in transfer-out fees.

1. 1Get regulated financial advice if you have a DB pension worth £30,000 or more. For other transfers, you can proceed without that specific advice, but consider professional help if matters are complex.

1. 1Choose a receiving provider and start their transfer process. They usually handle the paperwork and liaise with the old providers to move the funds.

# Considerations and risks

• Costs: moving pots can save costs long term but watch for transfer fees and exit penalties.

• Guarantees: moving money out of a DB scheme can mean losing guaranteed income and inflation protection.

• Investment fit: make sure the receiving pot has suitable funds or options for your risk profile and retirement plans.

# Example receiving options mentioned

# Is consolidation better? There's no universal answer. Consolidation can simplify record-keeping and reduce fees, but it can also strip protections or impose transfer costs. Evaluate each pot on type, fees, guarantees and your wider retirement strategy before making a move.

# Bottom line If you have several defined contribution pots, consolidation can make sense. Confirm pension types, compare costs and investments, and obtain regulated advice where required for defined benefit transfers. Proceed only after weighing fees, protections and whether the receiving provider meets your long-term needs.