Pension HelperWhat should I understand before consolidating my three old pensions?
Prepared for Sarah Morgan · Illustrative sample
1Illustrative £395 sample
What should I understand before consolidating three old pensions?
This fictional report shows the level of analysis a more involved pension question can receive: clear findings, useful numbers, the feature that matters most and practical next steps.
Illustrative only. Sarah Morgan and every pension, value, charge, guarantee and provider detail below are fictional. This sample demonstrates the style and depth of a Pension Helper report; it is not financial advice or a recommendation to transfer.
Pension HelperThe answer in plain English
Sarah is 54, has three old defined-contribution pensions worth £252,000 in total and wants to know whether bringing them together would make life simpler.
Main findingThese are not three interchangeable pension pots.
Pension 2 contains a guaranteed annuity rate at age 65. That feature is potentially much more important than the administrative convenience of having one account.
1Pension 2 needs special attention
Its 9% guaranteed annuity rate could be valuable. The exact scheme terms need to be confirmed before any transfer is considered.
2Pensions 1 and 3 look more comparable
Neither shows an obvious guarantee in the documents reviewed, so the comparison is mainly charges, access, investment choice and administration.
3Charges alone do not make a strong case
The current combined annual charge across Pensions 1 and 3 is about £760. A lower-cost consolidation could save money, but the saving is modest relative to the total fund.
What this means
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The useful question is not simply “three pensions or one?”. It is: which pensions can reasonably be compared for simplification, and which features must be protected or investigated first?
Three pensions, £252,000 in total
| Feature | Pension 1 | Pension 2 | Pension 3 |
|---|---|---|---|
| Provider | Aviva | Scottish Widows | Legal & General |
| Current value | £86,000 | £54,000 | £112,000 |
| Annual charge | 0.48% | 0.72% | 0.31% |
| Approx. annual cost now | £413 | £389 | £347 |
| Flexible access shown | Yes | Limited | Yes |
| Guaranteed annuity rate | No evidence found | Yes — 9% at 65* | No evidence found |
| Protected tax-free cash | No evidence found | No evidence found | No evidence found |
| Exit charge shown | None | None | None |
*Fictional example. A guaranteed annuity rate is only as valuable as its exact terms. The scheme would need to confirm the retirement age, basis, spouse's benefits, escalation, eligibility conditions and what happens if benefits are taken early or late.
Total pension value£252,000
Approx. current annual charges£1,149
Potentially valuable feature1 guarantee
What are you actually paying?
Charges matter, but they are only one part of the consolidation question. The documents reviewed suggest the three pensions currently cost about £1,149 a year in percentage-based product charges.
Pension 1 · 0.48% of £86,000≈ £413 a year
Pension 2 · 0.72% of £54,000≈ £389 a year
Pension 3 · 0.31% of £112,000≈ £347 a year
Total≈ £1,149 a year
What if only Pensions 1 and 3 were simplified?
The two more straightforward pensions total £198,000. Their current percentage-based charges add up to about £760 a year.
Current Pensions 1 + 3≈ £760/year
→
If £198,000 cost 0.35%*≈ £693/year
Difference≈ £67/year
*Illustrative comparison only. It assumes the whole £198,000 could be held at 0.35% and excludes any transaction, adviser, fund or platform costs not shown in the fictional documents.
Finding
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A saving of around £67 a year would not, by itself, make consolidation compelling. The bigger questions are whether administration becomes easier, whether investment and retirement options improve, and whether any existing features are lost.
Pension 2 is different because of its guarantee
The statement for Pension 2 refers to a 9% guaranteed annuity rate at age 65. In plain English, that could mean the plan has a contractual conversion rate that may be significantly different from rates available elsewhere.
Fictional current fund value£54,000
×
Illustrative guaranteed rate9%
=
Simple illustration£4,860 a year
This does not mean Sarah is guaranteed £4,860 a year from the current £54,000 today. The fund value at retirement and the detailed scheme terms would determine the actual benefit. The calculation simply shows why a 9% guarantee deserves proper investigation.
Questions the provider needs to answer
- Is the 9% rate guaranteed at exactly age 65?
- What fund value is used when the annuity is calculated?
- Is the income level, escalating or linked to inflation?
- Does it include a spouse's or dependant's pension?
- What happens if Sarah takes benefits before or after age 65?
- Would the guarantee be lost completely on transfer?
- Does the benefit count as a safeguarded benefit requiring regulated advice before transfer?
Why this matters
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It could take many years of small charge savings to offset the value of a useful guarantee. That is why Pension 2 should not be treated as just another old pot.
The practical trade-offs
What could become simpler
- Fewer accounts, logins and statements
- One place to update beneficiaries
- Easier oversight of investment allocation
- Potentially easier access at retirement
- Possibly lower charges on some pots
What could be lost or worsened
- Guaranteed annuity rates or other protections
- Existing low charges
- Particular investment options
- Scheme-specific retirement features
- Flexibility if the receiving plan is more limited
How the three pensions look from the documents reviewed
| Pension | What stands out | What needs doing next |
|---|---|---|
| 1 | Reasonably straightforward; higher charge than Pension 3 | Confirm full charge breakdown and retirement-access options |
| 2 | Potentially valuable 9% guarantee | Obtain written confirmation of every guarantee condition before considering transfer |
| 3 | Lowest stated charge; flexible access shown | Confirm whether it accepts transfers and whether current pricing would apply to a larger balance |
Bottom line from the comparisonPension 2 is the outlier. Pensions 1 and 3 are the natural pair to compare for simplification.
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That is an analytical finding, not a recommendation to transfer either plan.
Six answers would make the picture much clearer
- Ask Pension 2 for a guarantee statement.Request the exact guaranteed annuity terms, retirement age, spouse's benefit, escalation and transfer consequences in writing.
- Confirm all-in charges for Pension 1.The statement shows a plan charge, but we would also want to know whether separate fund charges apply.
- Ask Pension 3 whether incoming transfers keep the same pricing.The current 0.31% charge may not necessarily apply to a larger consolidated balance.
- Confirm retirement-access options on all three plans.Flexible drawdown, ad-hoc withdrawals and annuity purchase facilities can differ.
- Check beneficiary nominations.Consolidation is a useful prompt to make sure death-benefit nominations are current.
- Clarify Sarah's intended retirement age.The value of Pension 2's age-65 guarantee depends partly on whether Sarah expects to take benefits around that date.
Important
7
If the Pension 2 guarantee is confirmed as a safeguarded benefit, regulated financial advice may be needed before a transfer can proceed. Pension Helper would stop at the guidance boundary and signpost Sarah appropriately.
What Sarah can do from here
The value of the report
The question has moved from “Should I put all three together?” to a much better set of decisions.
Sarah now knows which pension contains the feature that matters, what the current charge differences actually amount to, what information is missing and which questions to ask before taking any action.
What Pension Helper has not done: recommended a transfer, selected a receiving pension, assessed investment suitability or told Sarah to consolidate. Those are different decisions and can require regulated financial advice.
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