A guide to tracing, consolidating and transferring your pensions

What is pension consolidation?   

This simply means transferring your pension pots together into one single scheme, such as bringing workplace pensions from previous jobs you’ve held into a personal pension.  

Combining these pensions in a single pot should mean less admin so giving you more control, a clearer idea of how much money you’re likely to have in retirement, and potentially better value if you reduce your fees.  

How do I trace my pension?    

According to the Pensions Policy Institute’s Lost Pensions Survey 2022 – and referenced by National Pension Tracing Day, which this year falls on 29 October – there could be an estimated 2.8 million unclaimed pensions in the UK, worth an average of £19,500 each – over £26.6bn in total.  

So, how should you go about tracking down your pensions? Your first port of call is to list all of the places you’ve worked at. Your next step will be to go through your paperwork to find pension statements from your old employers, though we’re aware this will be a daunting prospect for some.   

The good news is, if you don’t have the paperwork for your pension, or you’re unsure who the pension administrator is, then the government’s Pension Tracing Service is a good place to start. Here you will find a complete register of all workplace pension schemes.   

When tracing a pension, you will likely need to provide your name, address (at the time of opening the pension) and your National Insurance number. If you can’t find previous employers, it may be that they have been taken over – in this case, you may need to search Companies House for up-to-date details on firms.   

Once you have all the details, you’ll need to get in touch with those that run the schemes to regain access to any pots that you may have left untouched. You can get an up-to-date statement, update your contact details, and ask if you can register online.   

What are the pension transfer rules?   

If you leave your pension scheme, for example if you move jobs or stop making contributions, then the pension pot you have built up still belongs to you.   

Most pension schemes will allow you to transfer your pension pot to another scheme or to a new provider. This could be to your new employer’s pension scheme, a personal pension or a self-invested personal pension (SIPP).  

Before moving your pension, you should ask your existing scheme administrator for a transfer value (more on this later). You should also check that there aren’t any specific benefits with your pension, such as life cover, that you would lose if you transfer to a new scheme. You also need to ask if there are fees for moving your pension.  

Can I transfer a pension myself?   

Yes, it’s possible to transfer a pension yourself. Once you’ve tracked down all your old pensions, the logistics for transferring your pension are relatively straightforward. You should contact:   

• Your current pension provider and check that the pension scheme allows you to transfer some or all of your pension pot.  
• The provider that you want to transfer to, to confirm that they will accept the transfer.   

What does pension transfer value mean?    

The pension transfer value of your pot will depend on the type of pension you have. If you have a defined contribution pension – the most common type of workplace pension today – then the transfer value of your pension is the value of the investments at the time you are looking to transfer.   

If you have a defined benefit pension scheme – sometimes called a final salary pension – the value is calculated based on how long you’ve worked for your employer and your salary. However, it is worth double checking if you will lose any benefits that you have built up – such as a set level of income in retirement – before you transfer a defined benefit scheme.  

There are a number of factors that can affect the pension transfer value for a defined benefit pension: your age, your scheme’s retirement age, life expectancy and the current cost of living.    

Some providers do not accept defined benefit pension transfers, and many will require you to seek financial advice before transferring.    

What will transferring my pension cost?   

The amount you may pay in pension transfer charges will vary from provider to provider and from scheme to scheme, so it is important to check these fees before you transfer. Some providers will charge hefty exit penalties, that may mean transferring your pension isn’t a good idea.    

If your current pension provider charges to transfer out, then the pension charges will be deducted from the value of your pension. These fees may sometimes be charged as a flat, one-off fee or some providers will charge a percentage of the total pension pot. 

How long does a pension transfer take?   

Unlike switching bank accounts, where there is a seven-day guarantee to switch providers, the completion of pension transfers can take much longer.  

According to research carried out by Origo, which surveyed UK providers, the average pension transfer takes 14 days. However, the length of time to complete a pension transfer can vary considerably on a case-by-case basis, as each transfer will depend on a number of variable factors.   

Do I need a financial adviser to transfer a pension?    

Whether or not you need to get financial advice before transferring your pension will depend on the type of pension scheme. If your pension has ‘safeguarded benefits’ – which are particularly common in defined benefit pensions or a guaranteed annuity rate – and your pension transfer value is more than £30,000 then you will need to take regulated financial advice before transferring to a new provider.    

This rule is to protect you, to make sure you are aware of the pros and cons before you transfer and potentially lose valuable benefits.  

You can read more about when you might need to use a financial adviser for your pension in this guide. Nutmeg’s team of experts is on hand to help you with any questions around pension transfers that you might have, as part of a free financial guidance service.   

You may also wish to make use of our paid for, restricted financial planning service to create a retirement plan that’s right for you. Book a free call to speak to the team to understand your options, whether free financial guidance or advice with a fee.  

Should I transfer my final salary pension?   

It is possible to transfer a final salary pension and unlock the money you have in the pot. For some people, the ability to take advantage of the Pension Freedoms rules and access 25% of their pension as tax-free cash is motivation for transferring their defined benefit pension scheme.    

However, people can underestimate the value of the guaranteed pension income over the course of their retirement, which is why it is frequently a better option to remain invested in your defined benefit pension scheme.   

The complexity of the benefits of final salary pensions is why these require financial advice for transfers above £30,000. Whether or not you should transfer a final salary pension will depend on your specific circumstances.  

Can I transfer my pensions to another person?   

The short answer is no. Your pensions are personal to you. Pensions can only be transferred to another person in the case of a divorce or dissolution of a civil partnership (where the money held in a pension is considered an asset) or in the event of your death.    

Many personal pensions allow you to nominate who inherits your pension when you die. It is often simple to do, and you can select more than one person to inherit your pension.    

Risk warning   

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. A pension may not be right for everyone and tax rules may change in the future. Please note that during any transfer, your investments will be out of the market. If you are unsure if a pension is right for you, please seek financial advice.