The Consolidator's Guide to Personal Pensions

Published: 18 October 2018

Consolidating pension and investment pots into one place can make it easier to understand and keep track of your potential future wealth. It could even save you money in charges. But is it right for you?

Our consolidator’s guide articles aim to help you decide, by looking at the practical ins and outs of consolidating different types of savings pots, from personal and workplace Pensions, to ISAs and Investment Accounts.

When it comes to managing our pensions, the focus tends to be on the array of workplace pots we collect from different employers.

But a record 9 million people were paying into personal pensions at the latest count1, many of whom will have opened them either instead of, or in addition to, a workplace plan.

Two of the better-known types are stakeholder pensions and Self-Invested Personal Pensions (SIPPs). Group Personal Pensions are generally accessed through the workplace, so they’re covered in our separate Consolidator’s Guide for Defined Contribution Workplace Schemes.

Transfers into SIPPs – the type of Personal Pension we offer through Alliance Trust Savings – have almost doubled since the pension freedoms were announced in 2014, according to technology firm Origo, which said savers were taking advantage of the widening range of options available2. Transfers into normal Personal Pensions have also increased3, both from other Personal Pensions and from Workplace Schemes.

Is this evidence of consolidation activity? And what should you keep in mind about Personal Pensions if you’re thinking about consolidating your various plans and accounts?

Does the type of Personal Pension I have make a difference?

Not necessarily, as they are nearly all Defined Contribution (DC, or money purchase) arrangements where your returns depend on factors such as the amount you pay in, how long you pay in for, charges and the performance of your investments.

There are some types of individual pension from before 1988 (when Personal Pensions as we now know them came in) that may have guarantees and safeguarded benefits you would lose on transfer, or that you may not be able to transfer from at all. If your pension is described as a buy out bond, a section 32 buy out bond, a section 226 policy or a retirement annuity contract it may be one of these, and you should be able to confirm any guarantees or restrictions with the provider.

Otherwise, investment ranges, costs and other factors do vary between different types of Personal Pensions. For example, the costs for a Stakeholder Pension are capped by the government at 1.5% for the first 10 years and then 1% a year after that4. So, you’ll want to understand the position for each Personal Pension you have before deciding if they’re good candidates for consolidation.

How do investment ranges vary between products?

The variation can be significant, both between different types of Personal Pensions and the product versions of those offered by different pension providers. Investment options have widened in recent years and newer plans typically offer more choices than older plans.

Members of Stakeholder Pensions must be offered a default investment fund, so they don’t have to make investment decisions themselves, if they don’t want to. SIPPs, which were specifically designed to let you choose your own investments, won’t have a default fund. They also tend to have the greatest investment flexibility and may offer access to a wide range of asset types.

If it’s collective investments like unit trusts and open-ended investment companies you’re mainly interested in investing in, then you’ll probably find that many Personal Pensions will offer you a reasonable level of choice. If you want the widest possible choice of open ended funds though, and/or to consider listed securities – including investment trusts, exchange traded funds, equities and bonds – a SIPP is more likely to meet your needs

What else should I consider when it comes to my investments?

If it’s important to you to remain in the fund or funds your pension is currently invested in (or a close equivalent), you’ll want to check whether your destination provider can accommodate this.

If they do offer the same fund or funds you should be able to transfer ‘in specie’ (that’s without selling your investments first). But there are some circumstances where this might not be the case (for example, if your destination provider offers a different share class in the fund) so it’s worth double checking to make sure you understand the ins and outs in your particular situation.

Where you have to sell investments from your current pot as part of the transfer process you may have to pay trading charges. You will also be ‘out of the market’ for a time, meaning you won’t benefit from any rises in value or income you may otherwise have received from your investments during that period.

What charges do I need to look out for?

When assessing whether and where to consolidate personal pension pots, it’s important to look at all relevant costs including annual charges, investment charges and any event driven charges (for trading in investments, for example).

There will usually be some form of charge for transferring out of your current pot, such as an exit penalty. Be sure to check for this, as a hefty charge - and they can sometimes be thousands of pounds, especially when it comes to older personal pension contracts - could erode the benefits of moving the pension.

The charges cap on the Stakeholder Pensions introduced in 2001 helped drive down the cost of pensions overall, which means that any products you took out prior to then are more likely to be on the expensive side.

Then there’s the cost of the product you’re considering consolidating in to. Charges can vary markedly between different Personal Pension products and different investment options within them, so it’s worth shopping around to make sure the one you choose is offering a good deal for your needs and circumstances.

Two things to think about here are:

  • Would you be better with a provider that charges a flat fee for looking after your pension (like Alliance Trust Savings for example) or one that charges a percentage of your investment? As a general rule of thumb, the higher the value of your pension pot after you’ve consolidated, the more likely you are to benefit from being with a flat fee provider.

  • How often do you expect to trade investments in your pension? Dealing charges can potentially add up if you plan to manage your investments very actively.
Before making any final decisions, it’s also vital to specifically compare costs and services for the possible destination pot you are looking at, with those for your existing plans, to satisfy yourself you’ll be getting value from the move.

Why are so many people transferring into SIPPs?

SIPPs have become more widely used since the pension freedoms took effect. That may be because they suit those who want to make the most of those freedoms through ensuring flexibility and investment choice when it comes to their pension savings.

If access to the full range of income options from your pension when you reach age 55 is important to you, make sure you check that any destination pot you are considering will offer you that. For a reminder of your options, read our guide to Accessing Your Pension Savings.

SIPPs allow you to invest virtually anywhere you like and to control your investments. Many providers (including Alliance Trust Savings) also let you view and manage your account online. If you’re willing and able to take responsibility for your investments, consolidating into a SIPP may be an option for you.

When might a SIPP not be such a good idea?

The reality is that unless you want a wide range of investment choices and you’re comfortable with having control over your pension, there’s not so much of an advantage to using a SIPP. With the flexibility can come additional responsibility and risk. The extra investment choice can also make SIPPs more expensive than some other personal pensions.

Should I take advice?

With the level of detail that can be involved in pensions you may well benefit from advice, especially if you are also considering consolidating Defined Contribution or Defined Benefit workplace pots. If you have safeguarded benefits worth more than £30,000 in any of your pots, your transfer will have to be signed off by a Financial Adviser.

The fees paid for financial advice will add to the overall costs of transferring, but a good Adviser can help you save far more over the long run. They will be especially helpful when it comes to comparing different schemes and ensuring all your investments remain in line with your objectives, risk appetite and capacity for loss.

How do I find a financial adviser?

The Money Advice Service offers tips on how to choose a Financial Adviser. You can also find an Adviser near you through sites like or


Consolidating Personal Pensions can help provide a clearer overall view of your retirement savings, making it easier to keep track, compare how different investments are performing and consider your options when the time comes to start taking your money out. You may also be able to save money in charges, especially if you took your Personal Pension out before 2001 when Stakeholder Pensions began to push prices down.

But as with all financial decisions, you should take the time to check your facts first. Pension transfers can be complex and you could lose valuable benefits in the process, so take professional advice if you are unsure whether consolidating is right for you.

Important information

This is provided for general information only and takes no account of personal circumstances. It is not a recommendation to buy or sell. It is provided solely to support you in making your own investment decisions. If you have any doubts as to their suitability you should seek expert advice. Alliance Trust Savings does not give financial or investment advice.

Laws and tax rules may change in the future without notice.

Please be aware that the value of investments can fall as well as rise so you could get back less than you invest.

1 HM Revenue & Customers, Personal Pension Statistics, 28 February 2018 – pg 12

2 FT Adviser, SIPPs benefit as pension transfers up 30%, 11 January 2018
3 Retirement Planner, Transfers into SIPPs double post-pension freedoms, 29 March 2017
4 The Pension Advisory Service, Conditions for Stakeholder Pensions

Consolidate and save?

We charge you flat Account fees rather than fees based on a percentage of the value of your investment. Please see our Charges Guide for more information on Account fees.

So as your investments grow your Account fees won’t. If you consolidate from elsewhere you might be surprised just how much you could save.

See how our charges compare

Alliance Trust Savings Limited is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings Limited gives no financial or investment advice. ‘Alliance Trust Savings’, ‘ATS’ and 'AT Savings' are all brand names of Alliance Trust Savings Limited together with the ‘Alliance Trust Savings’ logo are owned by and used with the permission of Alliance Trust PLC, the previous owner of Alliance Trust Savings Limited.