If you’ve ended up with several different pensions it’s vital that you know how you can maximise the money you get from them.
Plenty of us have several jobs over our lifetimes and sometimes manage to lose touch with our pensions, especially if we’ve moved house and forgotten to notify our pension providers. Tracking down a long lost pension doesn’t have to be difficult but many people don’t know how to go about it. And if you have several small pension pots you could find it harder to make sure that they are all working as hard as they possibly can for you.
Here, we look at how to stay on top of multiple pensions, and what you can do to help make managing your retirement savings easier.
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
Keeping track of your pensions
You should receive statements from your pension provider(s) every year telling you how much income you’re likely to receive from your pension at retirement. If you can’t recall seeing anything from them, either in the post or email, it could mean that they don’t have up-to-date details for you. Learn how you can locate any missing pensions in our article Tracing lost pensions – How to find my old pensions.
If you’re determined to keep on top of your pension paperwork from now on, here are three tips that can help:
- Check your pension statements. Look out for your annual statements and keep them in a safe place.
- Keep in touch with your pension provider. If you have a workplace or private pension you should make sure you give them your contact details if you move house.
- Understand how much you’ll need for retirement. The statements you receive each year should give you an indication of how much you might get at retirement, but it’s really little more than an educated guess. There’s no guarantee that you’ll get as much as the lower estimates while it’s possible (although unlikely) that you might get more than the optimistic estimates. This means you should keep an eye on the amount you’re due to receive and check whether it’s likely to pay for the retirement you want. Find out more in our article Can you afford to retire?
Top up your retirement savings
Once you’ve tracked down your pensions and reviewed them to find out how much you’d receive at retirement, it may be worth trying to boost your pension. If you’ve been auto-enrolled into your employer’s workplace pension scheme, the minimum contribution is 8% of your qualifying earnings. Of that 8%, your employer can’t contribute less than 3%, but they can pay as much of the 8% as they want. Your payslip should show any pension contributions that are deducted each month.
Some employers will pay in more than the minimum contribution, and you can usually pay in extra if you want to, so this is well worth considering if you can afford to do it. You can also able to make additional one-off voluntary contributions into your workplace pension at any time and still receive any tax relief eligible to you. If you’re not sure how much you should be putting away for the future, read our article How much should I save for retirement?
If you’re lucky enough to still belong to a final salary scheme and you can buy added years (extra years’ membership of the scheme) this is usually a good option because you know what you’re buying and the benefits can be generous.
You can find plenty more ways you might be able to give your pension a boost in our guide 11 simple ways to top up your pension in 2025.
As you approach retirement
You should start thinking about how you’ll take an income from your pensions several years before you stop working.
The main options are drawdown or an annuity. With drawdown, – sometimes known as flexible drawdown or flexi-access drawdown – your defined contribution pension savings remain invested once you retire, and draw an income from them when needed. You’re also free to take a 25% tax-free lump sum out if you want to. You can learn more about how drawdown works in our article What is pension drawdown and how does it work?
If you have decided to use some or all of your pension savings to buy an annuity (which works like life insurance in reverse, paying out for as long as you’re alive) you can normally get a bigger income by shopping around.
In financial jargon, this is known as exercising your ‘open market option’. All it means is that you don’t buy an annuity from the company that you’ve built up your pension fund with but shop around to see if you can get a better deal elsewhere.
It essentially works in the same way as shopping around for a mortgage or savings account with one major difference; whereas you’re not tied to your mortgage lender or savings provider for life, with an annuity it’s normally a once in a lifetime decision. Learn more in our guide Why it pays to shop around for your annuity.
Should you consolidate your pensions?
Consolidating pensions that are similar into one scheme can make managing your money easier, as you’ll only be sent one pension statement each year and have one set of investments to monitor. You might also be able to reduce the charges you pay.
However, it’s best to always check that by combining your pensions, you aren’t giving up any valuable pension guarantees – for example transferring a final salary pension into a personal pension plan is rarely the right decision as you’ll be forfeiting a guaranteed income for an income which isn’t guaranteed and comes with investment risk. You can find out more in our guide Should I transfer my final salary pension?
There are both benefits and downsides to consider if you’re thinking of pension consolidation so it’s vital to seek professional independent advice if you want to be certain this is the right course of action for you. Learn more in our article Should I consolidate my pensions?
Cashing in small pensions
You might have several small pensions kicking around that you’d rather cash in than consolidate. Provided you have no more than three small pots of £10,000 each from non-occupational pension schemes and an unlimited number from separate occupational pension schemes) then subject to the scheme rules, you may be able to take these as cash lump sums without triggering what’s known as the Money Purchase Annual Allowance.
The MPAA normally kicks in if you take out more than your 25% tax-free lump sum pension cash, and means that the maximum you’ll be able to pay into your pension in any tax year reduces to £10,000 rather than the usual £60,000 annual allowance. You can find out more about how the MPAA works in our article What is the Money Purchase Annual Allowance?
Whatever you’re considering doing with your pensions, it’s usually a good idea to consider seeking professional financial advice. That way you’ll have peace of mind that you won’t fall foul of current pension rules, and that you’ll hopefully end up with as much from your pensions as you possibly can.
If you’re considering seeking professional financial advice on the options available to you, we’ve partnered with nationwide independent advice firm Fidelius to offer Rest Less members a free initial consultation with a qualified financial advisor. There’s no obligation, however if the adviser feels you’d benefit from paid financial advice, they’ll talk you through how that works and the charges involved.
Fidelius are rated 4.7 out of 5 from over 1,500 reviews on VouchedFor, the review site for financial advisors.
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