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How many pensions can you have?

10th August 2020

In the UK, there are no limits on how many pension pots you can have. The only limiting factor is the amount that you hold in them when combined; this is called the Lifetime Allowance and it currently stands at £1,073,100. If you have multiple pensions (or you aren’t sure how many you have), read on to learn about the different schemes that exist, how to find out where your pensions are, and whether or not you should bring them into one single fund. 

 

Different types of pension 

Workplace pensions 

There are multiple types of pension, some of which you’ll be aware of, and others you perhaps won’t. By far the most common type of pension is the workplace pension. Whilst there are different sub-categories of workplace pensions (for example, final salary schemes and money purchase schemes), the logic across them is the same; both you and your employer contribute to the pot, which will provide you with a future benefit. Quite often, furthermore, workplace pensions come with other benefits such as life insurance or support for dependent family members. 

Since October 2012, every employer has had to automatically enrol employees onto a pension scheme provided that they are: 

  • Not already paying into a workplace pension scheme 
  • Aged 22 or over 
  • Under State Pension age (which is currently 65)
  • Earning more than £10,000 annually 
  • Working in the UK 

Whilst auto-enrolment is important in ensuring that more people are contributing towards their future financial stability, it also means that it’s easier to lose track of how many pension pots you have. With job-hopping on the rise in the UK, it’s more than possible for individuals to have multiple workplace pensions (more on this below). 

 

Personal pensions 

It’s also possible to have a personal pension alongside, or separate to, a workplace pension. Again, there are various types of personal pension, but a common aspect of all is that you have more control over them; which stocks and shares you invest in, how much risk you’re exposed to, and when you’re able to withdraw the benefits are all aspects that you can expect to have greater control over with a personal pension. 

 

How to find lost pensions 

If you’ve changed employers multiple times across your career to date, it’s likely that you’ll have more than one pension pot. Without keeping tabs on them, you won’t have an accurate overview of your pension potential which will consequently affect how you plan your personal finances. 

Tracking down your pensions, however, is easier than you might think. Rather than trawling through piles of old paperwork, the government offers a free, simple, and fast online service to help you find your lost pensions. All you have to do is input your previous employer’s name and the platform will provide you with contact details of the associated pension provider. Once you have this, you can contact them in order to find out more details on your previously lost pension pot. 

 

Should I consolidate my pensions? 

There are multiple benefits to consolidating your pensions if you find you have more than one pot. Aside from being easier to manage, you might actually benefit financially from merging them into one fund. Each individual pension provider charges management and investment fees, which can quickly tot up. Furthermore, some providers actually charge you for inactivity (not contributing to a pot), and so your pension gains are soon whittled down. 

Having said this, consolidating your pensions is not a unilaterally positive move. There are potential downsides, including the loss of certain benefits associated with particular schemes. When considering combining your pensions, we’d always recommend speaking to a fully-accredited financial advisor

 

If you need help managing your pensions, get in contact with IMC Financial Services. Our expert advisors will be able to guide you on how to manage your funds in order to provide for financial stability when you retire. 

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