We present to clients about pensions and the question I can almost guarantee will be asked is this: should I consolidate my pensions?
On paper, consolidating workplace pensions looks like basic housekeeping. Fewer logins, clearer paperwork, and a single view of your retirement savings. Most people who have tried it come away thinking it felt harder than it should have been.
Part of the problem is guidance. You are told consolidation can be a good idea, but not what to watch out for in any meaningful detail. The result is people either avoid it entirely or, quite reasonably, end up doing what many do in practice; they have multiple pots.
Not all pensions are created equal
The starting point is simple. Different workplace schemes have different strengths, and those differences matter over time.
Charges are the obvious one. Some older schemes or large employer arrangements have very competitive fees. Newer pots, particularly from auto-enrolment providers, can look slightly higher once the small print is considered.
Then there is fund choice. Some schemes keep things tight and simple. Others offer a wider investment range, including more specialist funds. Depending on how engaged someone is, that flexibility can either be useful or completely unnecessary.
This is where consolidation becomes less straightforward. Moving everything into one pot might simplify things, but it can also mean giving up a specific benefit you actually value, even if you did not fully realise it at the time.
Charges matter, but not in isolation
It is easy to fixate on fees as the deciding factor. Lower charges generally mean more of your money stays invested. Over decades, that compounds.
But charges only tell part of the story. What you are paying for matters just as much.
A slightly higher fee might come with better fund options, more robust default strategies, or a provider that is easier to deal with. On the flip side, a rock-bottom charge does not help if the investment choice is limited in a way that does not suit your approach.
For someone holding multiple pots, it is quite common to keep one because it is cheap and another because it offers better investment flexibility. That is not messy decision-making. It is a trade-off.
Guarantees and hidden features
One of the most common reasons people regret consolidating is that they unintentionally give something up.
Older pensions, in particular, can include features that are not immediately obvious. These might include:
- Guaranteed annuity rates that are far better than anything available today
- Protected tax-free cash entitlements
- Exit penalties that make moving out costly in the short term
The difficulty is that none of this is especially visible unless you go looking for it, and many people simply are not told to check.
This is where the “clunky” experience often comes from. You are expected to make a decision with partial information, across providers that all present things slightly differently.
Investment strategy is personal, not standard
Another reason consolidation is not always a clear win is that people do not all want the same thing from their pension.
Some are happy in a default fund that gradually de-risks over time. Others want to take more control, adjust allocations, or hold specific asset types.
Having multiple pots can allow for a mix of approaches. For example, one pot might sit in a low-cost default strategy while another is used more actively. Consolidating removes that split unless the receiving scheme can accommodate both approaches equally well.
Again, this explains why some people deliberately keep separate pensions. It is less tidy, but it reflects how they actually want their money invested.
Practical friction is still real
It is also worth acknowledging the operational side. Transferring pensions can be slow and administrative. Forms, identity checks, waiting periods, and the occasional need to chase providers.
For someone expecting a smooth digital process, it can feel out of step with everything else in financial life.
That friction often nudges people towards leaving things as they are unless there is a very clear reason to act.
A more realistic way to frame consolidation
Rather than treating consolidation as an automatic “good idea,” it is more useful to frame it as a decision with a clear question behind it.
What problem are you trying to solve?
If the answer is purely administrative, tidier paperwork and fewer accounts, consolidation might make sense. If the answer relates to cost, investment strategy, or access to specific features, then it becomes a comparison exercise, not a default action.
For many people, the honest outcome is a blend. Consolidate where it is clearly beneficial and keep separate pots where each one serves a purpose.
If you are a HR leader thinking about financial wellbeing, ask yourself this: Do you have a way to support employees navigate this? If not, drop me a message adam.bell@wbs.e-innovate.dev
