Consolidating Frozen Pensions Into One Scheme

Where pensions are concerned ignorance is not bliss. Over a working lifetime, you may collect several frozen (paid up) pensions as you move jobs and leave workplace pensions behind. Failure to check those pensions regularly and take any necessary action could knock thousands of pounds off the value of your total pension fund at retirement. 

If you do decide to take action you have several options. One of those options is consolidating several frozen pensions into one scheme. 

Why Should You Consolidate Frozen Pensions

If a pension fund is not performing at or around the industry average and/or the fees are high it will reduce the fund size you have available at retirement. It could be the difference between buying a new car, taking a nice holiday or helping out loved ones at retirement (or not).

You should not assume a frozen pension is under-performing but it is important to check. We have defined an underperforming pension elsewhere on this blog. Older pension schemes can have high annual charges that may impact on the value of a pension fund over time. Moving to a new scheme may deliver lower costs overall. 

Grouping together several frozen pensions into one fund can save you time and trouble when trying to check pension fund performance. 

Key Issues To Consider

Consolidating frozen pensions is not the right way forward for everyone. Moving a frozen pension should be considered carefully. It is vital to consider both your personal circumstances and the terms and conditions of each pension or you could leave yourself worse off. Some older pension schemes offered valuable benefits such as a guaranteed annuity rates or a higher than average tax free sum.

If you do decide it would be best to move a pension it is important to check the exit fee, if you are under 55 it could be significant. Even if the pension fund is moved to one with lower annual fees and higher growth it may be impossible to recover this value in the time available before retirement.

Of course, the potential new pension scheme must be carefully checked. You need to check all fees (some may not be immediately obvious) to make sure the scheme does actually deliver better value. A new scheme may have minimum contribution requirements that do not fit with your circumstances. There may also be minimum initial investment requirements.

It is vitally important to be aware of Scams. If an offer seems too good to be true it almost certainly is. Be careful to check that whatever scheme you choose is regulated by the FCA and that the investment you undertake is too, be very wary of any offer that seems exotic, unusual or just too good to be true.

When To Consolidate Pensions

Ideally, a decision should be made to consolidate frozen pensions (or not) 10 to 15 years from retirement. It is probable there will be some costs associated with the move. If close to retirement there may not be the time for the new pension fund to grow sufficiently to cover those costs.

What Is Involved In The Pension Consolidation Process

The first step is to evaluate your pension documentation to check a move is the best way forward (see above). Assuming the pension scheme will allow the transfer and a thorough review of your circumstances suggest a frozen pension transfer may be best, the first step is to request a transfer valuation from the pension provider.

This process should be repeated for each frozen pension to be transferred. The next step is to choose a new pension scheme to accept the transfer(s). Self Invested Personal Pensions (SIPP’s) are a popular choice but there are several options.

It is important to consider the reputation of the new pension provider, their service levels, how involved you wish to be in choosing your investments, the mix of investments (asset classes) available, potential investment growth and fees.

A significant amount of form filling and liaison with each existing pension provider should be expected. The process can be frustratingly slow and time consuming. 

You may decide to employ a Financial Adviser to advise on the wisdom (or otherwise) of consolidating frozen pensions. They can also advise on the best receiving pension scheme for the funds and look after all of the administration tasks.

Analysis of your frozen pensions should at least deliver an understanding of growth rates and charges. You may decide on no action. You may decide to change the level of your contributions. Or you may decide that a pension transfer to a different scheme and/or consolidating several frozen pensions is the best way forward for you.

If you have any questions call us on 0800 043 8341 or open a Chat and we will be happy to help. If you would like a call back please complete the form below and we will call you back when it is convenient for you.


This blog is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific investment or course of action. The past is not a guide to future performance. The value of investments can go down as well as up and you may not get back the full amount you invested. Tax and financial regulations can change. Any figures quoted above are correct at the date of publication.

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