Should the self-employed combine their pensions?

  •  By
  •  Murray Humphrey

Starting to work for yourself is a significant new chapter in your life.

A brand new chapter; you're leaving the world of employment behind for a more rewarding adventure.

A vital part of setting yourself up for success is making sure your personal finances are in good order. This means taking charge of your finances, invoicing, and tax returns. But what about your future? Are you neglecting your pension?

Here's one way you can sort your pension and pave the way for a brighter tomorrow.

Securing your financial future

Your pension is the key to your financial future.

If you’ve been employed in the past, you’ll have a workplace pension or two set up for you. Unfortunately, as is so often the case, the self-employed are left to fend for themselves when it comes to pensions.

And this is why it’s so important to make sure you’re on top of yours - no matter how far off retirement may seem.

Our research reveals that in the UK, we underestimate the value of our pensions by up to 33%. That means your old pensions from your employed life could be larger than you think - particularly if it’s been a while since you worked there.

Sorting out your pensions becomes even more important if you’re approaching retirement age, currently 55 but rising to 57 soon.

So what should you do? Your first step is to get a clearer picture. Time to track down your old pensions.

How to find your old pensions

The easiest way to track down your old pots is via our Find My Pension service. Here’s how it works.

Simply give us the name of your old employer, roughly how much you think you have saved and they’ll hunt down the contact details of your old pension provider for you.

Then, it’s just a case of getting in touch with them to confirm your policy number

If you aren’t a Penfold saver, you’ll need to do a bit of digging.

To track down your old workplace pensions, you’ll need 3 key bits of information:

  1. The name of your old employer
  2. The name of your old pension provider
  3. Your pension policy reference number

If you don’t already know, your first challenge is finding out which pension provider your old company(s) used.

You can find this information by digging out any old communications about your pension.

Check your emails and paper records for any welcome packs, annual statements or fund overviews. Make a note of the name of the pension provider each employer used.

Next, you’ll need to find your pension policy number.

This is a unique 16 digit string of letters and numbers used by your provider to identify your individual pension. You may also see this referred to as a ‘pension number’ or ‘customer reference number’.

Again, your best bet is to check your emails and paper records.

How to combine old pensions

Once you’ve found your old pensions, your next step is to transfer them into one, easy to manage plan.

Before you can start a pension transfer, you’ll need 4 bits of information to hand:

1: Where is your pension going?

You’ll need to decide which pension provider you’d like to combine your pensions into. Many providers, like Penfold, let you open a new plan with a pension transfer.

2: Where is your pension right now.

You’ll need the name of your old pension provider you’re transferring from as well as your pension policy number or reference number. Check out our video on finding pensions for more on that.

3: How much are you transferring? 

You’ll need to let your new provider know how much is your pot. Don’t worry too much if you aren’t completely sure - this can be an estimate.

4: Are there any fees?

Some providers will charge you an “exit fee” for moving your pension out, or a setup fee for transferring in.

This is normally a percentage of your total savings so it’s worth taking into account before making a decision.

Once you have all your details, the process of transferring your pension is fairly straightforward. Simply send your pension details to your new provider and ask them to start the transfer. 

Should you combine?

Before you combine your pension into a self-employed plan, there are a few things you’ll need to check first.

Should you transfer your pension or are you better off where you are?

Take a look at your current pension and carefully compare it to your new plan. In particular, make a note of:

  • fees and charges (including exit or transfer fees)
  • your pension fund options (what options you have for investing your money)
  • your retirement options (the ways in which you can access your money later on)

Remember, not every type of pension is able to be transferred - so you’ll need to check your documentation or speak to your old provider to make sure you’re able to transfer your pot.

Some pensions also offer special benefits or guarantees. In particular, Defined benefit or final salary pensions are often very generous and can be complicated to transfer.

If you have a defined benefit plan, we recommend chatting with an independent financial advisor before making a decision

Once you’ve transferred, you have 30 days to change your mind. You can use this window to request to move your pension back to your old provider.

Just remember that your pension may have dropped in value while invested in your new plan.

Transferring with Penfold

Penfold make transferring pensions a piece of cake.

Simply tell us your old details and we’ll take care of the rest - keeping you updated every step of the way.

Combine your old pots into a self-employed plan today.

It's important to compare providers’ fees & any guaranteed benefits when deciding on whether to transfer, and be sure that the investments available are suitable for you. We cannot accept defined benefit pension transfers.

If you decide to close your Penfold account and the value of your pot has gone down, the amount returned to the provider may be less than what you originally transferred.

Please know that if your employer is paying into your pension currently, transferring that pot may mean you lose out on their contribution.

A photo of Murray Humphrey

Murray Humphrey