Three old pension pots: consolidate after the benefits check, not before

Assume each old scheme's total annual charge, including fund costs, is 0.6%, and a suitable receiving scheme's total charge on the same investment mix is 0.3%. These are illustrative assumptions, not current quotes for these three unknown plans. Nest publishes a 0.3% annual management charge for its own pot, but also levies 1.8% on new contributions; its page says transferred-in money does not incur that contribution charge. Nest's tariff is a benchmark, not evidence that any household's receiving scheme costs 0.3% all-in. Obtain actual all-in charges, including any receiving fund and exit costs, before deciding.

On £20,000 at the starting balance, 0.6% costs £120 a year and 0.3% costs £60: £60 difference at today's balance. The chart shows one year's starting-balance charge, not a forecast or guaranteed saving. If the balances change, the pound charge changes too.

Even on this modest pot, a 0.3 percentage-point gap is recurring. At a flat £20,000 balance and unchanged charges for 15 years, the simple difference is £900 (£60 × 15), ignoring investment growth, withdrawals and compounding. Both sides use the same horizon; a £900 figure is not a projection of the pot at retirement. With an assumed £90 one-off transfer cost, the simple charge saving breaks even after 18 months (£90 ÷ £60 × 12). A charge cap, flat account fee or a different fund would change that calculation.

Fewer logins also make the annual review more likely to happen. A holder who sees all three pots together can compare allocation, beneficiaries and retirement options in one sitting. That administrative gain is real only if the receiving scheme offers the investments and retirement route needed. Our guide to finding and combining old pensions covers the tracing step; GOV.UK says the tracing service finds scheme contact details, not the value of a missing pot.

The comparison also has a reverse test. If the destination instead costs 0.5% all-in, the difference falls to £20 a year and the same hypothetical £90 transfer cost takes four and a half years to recover at a fixed balance. If both routes cost the same, there is no fee case at all; consolidate for the administration only if the plan suits you and benefits survive. That is why the fee schedule should be requested for the specific fund choice rather than the provider’s lowest advertised option.

Ask each old provider for its current transfer value, full charges (including underlying funds), exit fees, any protected tax-free cash, protected pension age, guaranteed annuity rate and other guarantees. Then ask the proposed receiver whether it accepts the transfer, what the selected investments cost in total and how long cash could be out of the market. GOV.UK explicitly warns that transferring can lose protected rights and carry fees. If any special right exists, stop and seek regulated advice on its value before considering consolidation.

The three old pots are dormant in this example. Do not transfer the live employer scheme just to tidy a dashboard: employer contributions depend on the workplace scheme's rules. If the receiving product has a flat fee that overwhelms the small percentage saving, keep the old scheme. My opposite number explains why keeping three pensions may be the safer default.

Request the old schemes’ latest benefit statements as well as online summaries. An old employer may have negotiated a discount that a publicly advertised personal plan does not offer; do not assume "workplace" is expensive or "personal" is cheap. Put each response in a simple grid: old pot value, total annual charge in pounds and percent, transfer fee, protected rights, proposed destination fund, destination total charge, and retirement withdrawal options. Three yes/no answers on protected rights matter more than a slick app. If one plan cannot confirm its terms, leave that pot in place while assessing the other two separately.

A guaranteed annuity rate or protected access date is not interchangeable with a few pounds of annual fees. The FCA describes the loss of guaranteed income on a defined-benefit transfer; our example is defined contribution only, not an invitation to transfer a final-salary pension. You also do not need a cold caller to collect old pots: the FCA warns that unsolicited pension reviews can be scams. Start with your existing provider and verify any adviser independently.

Finally, check the investment mix rather than comparing two schemes that only share a fee label. A default fund that reduces equity exposure as its target date approaches is not equivalent to a static equity tracker. If the portfolio changes during consolidation, differences in eventual balances cannot honestly be assigned to fees. Keep the charge calculation separate from a decision to change risk, and record both decisions.

This article is for informational purposes only and does not constitute financial advice. You should seek independent financial advice before making any investment decisions.