Pension experts on how to track down old pensions and whether combining them is the right move

“The estimated value of lost pension pots across the UK has risen to more than £31 billion (31.1bn) – that’s equivalent to £931 for every working person,” says Lizzy Holliday, director of public affairs and policy at now:pensions. “If you’ve been working for a while, it’s highly likely that you will have accumulated several workplace pensions with previous employers and may have lost track or don’t remember whether you had a pension with any of them.”

It’s important to keep those pensions in mind as you continue through your career, and for many people one of the best options is to consolidate them into one, easily-managed plan.

But how do you do that, what should you consider before doing it, and what potential downsides should be kept in mind?

Let’s take a look while noting that nothing detailed herein constitutes individual financial advice, and it is highly recommended that you source advice before taking any action.

How to consolidate auto-enrolment pensions

Consolidating your pensions essentially means merging your different pension pots into one, giving you a combined sum that can be easily managed in one place. The traditional method is to do it manually by gathering information on all of your pensions and doing the necessary paperwork to get them moved over to the singular plan you want to use.

“When it comes to consolidating, the first step is to gather all the information about your existing pensions,” says Fiona Peake, personal finance expert at Ocean Finance. “Make sure you have up-to-date details for each one, such as the provider, the value of the pension, and the terms of the scheme. You can usually do this by checking your annual pension statement or contacting your previous employers or pension providers directly.”

Once you’ve gathered all of this information, you will then need to request a pension transfer form from each one, complete them, and submit them for transfer. Before you can do that, however, you have to decide to where all of those pots should be transferred.

“Once any pensions have been tracked down, employees should look at their different providers, pension savings and protections with existing pots that they may have and decide whether and where to consolidate their pensions,” says Holliday. “They can do this by asking a pension provider to consolidate their pots for them.”

Some pension providers, such as PensionBee and Aviva, can do much of the legwork on your behalf. However, it’s important to take stock before pulling the trigger. “Consolidating pension savings isn’t always the right solution, and savers should consider the pros and cons as well as seeking advice if needed,” adds Holliday.

What should you consider before making the switch?

There are pros and cons to consider before consolidating your plans. Many of these are specific to the plans you already have and any additional benefits they may offer, but your own long-term financial plans and goals need to be factored-in, too.

First up, find out whether any of your existing plans are in lifestyle funds. These funds automatically adjust your investments as you approach pension age, often by directing them to more low-risk options. If this suits your long-term plans, check whether the target pot provides this option. If you prefer to manually select where your funds are invested and your preferred risk level, check whether the pot you’re consolidating into provides this level of control.

Additional benefits may also apply to your old pension plans that are worth retaining. “Another consideration is whether your current pensions come with valuable guarantees,” says Jono Randell-Nash, independent financial adviser at MWA Financial Advice. “Features like enhanced life or death benefits, guaranteed annuity rates, or scheme-protected tax-free cash may be lost when transferring, so it’s essential to understand what’s at stake.”

There’s more besides these to consider. A major one is where and how your funds are invested, and whether the plans offered by your new main pension provider suit your preferred risk levels and ethical considerations.

Fees are another essential element to understand before making the switch. Tax-related issues are another thing to consider, and again it’s recommended to seek expert advice to assess your own situation and circumstances. Annual contribution limits and inheritance tax are just a couple of factors that need proper consideration before consolidating your pensions.

How to track down lost pensions

If you’ve lost track of any pensions, you’ve got a few options available to get them back in sight.

“We are looking forward to seeing further progress from the Government’s Pensions Dashboard Programme, which will enable savers to see all their pensions savings in one place,” says Holliday. “In the meantime, the Pension Tracing Service is a free-to-use service that can help employees to track down their old workplace pensions.”

Other options include contacting your former employers to check which schemes they use, and then follow up with the relevant providers.

The bottom line

While the benefits of having everything in one, easily-managed platform may seem like a no-brainer, it’s important to exercise caution lest you inadvertently encounter fees or lost benefits that you weren’t expecting.

It’s important to seek expert advice and guidance before making any changes. You’ll be glad to have all your auto-enrolments present and accounted for, but you’ll be even happier to have done it without any nasty surprises.