How Many Pensions Can You Have

How Many Pensions Can You Have?

There is no legal limit to the number of pensions you can have in the UK. In fact, it is common for people to accumulate several pensions over their working life, especially if they change jobs, start their own business, or make extra savings towards retirement.

This article explains how many pensions you can have, the types of pensions available, and what to consider when managing multiple pension pots.

Can I have more than one pension?

Yes, you can have as many pensions as you want. People often hold:

• A State Pension, paid by the government

• One or more workplace pensions, arranged by different employers

• One or more personal pensions, such as a stakeholder pension or a self invested personal pension (SIPP)

Each pension is treated separately and may be subject to its own rules, charges, and investment strategy.

Why do people have multiple pensions?

Most people build up several pensions during their lifetime for a few reasons:

1. Changing jobs

Each time you start a new job, your employer may set up a new workplace pension for you. Over a 30 or 40 year career, this can lead to several different pension pots.

2. Setting up personal pensions

You might choose to set up a personal pension to top up your workplace pension, especially if you are self employed or want more investment control.

3. Transferring or consolidating pensions

Some people combine their pensions into one to make them easier to manage. Others keep them separate for flexibility or to preserve certain benefits.

Is there a limit to how much I can contribute?

While you can have as many pensions as you like, there are limits to how much you can contribute each year and still receive tax relief:

• The annual allowance is currently £60,000 or 100 percent of your earnings, whichever is lower

• If you exceed this allowance, you may have to pay a tax charge

• If you have started taking income from a defined contribution pension, your annual allowance may be reduced to £10,000 under the Money Purchase Annual Allowance (MPAA)

These limits apply to the total contributions across all your pensions, not each one individually.

What about the lifetime allowance?

As of April 2024, the lifetime allowance has been abolished, which means there is no longer a limit on how much you can build up in pension savings during your lifetime without facing an extra tax charge.

However, there are still limits on how much tax free lump sum you can take, so it is important to review your overall pension planning regularly.

What are the benefits of having more than one pension?

Having multiple pensions can offer several advantages:

• Diversification: Different providers may offer different investment options and performance

• Flexibility: You can choose when and how to access each pension

• Security: You are not relying on a single provider

• Tax planning: Managing withdrawals across multiple pensions may help you reduce your tax bill

What are the downsides?

While it is perfectly legal to have multiple pensions, there are some drawbacks to consider:

• Harder to keep track: With multiple providers, it can be difficult to monitor performance and charges

• Risk of lost pensions: You may forget about older pensions from previous employers

• Different rules and fees: Each provider may charge different fees or offer different access options

You can reduce these risks by keeping clear records and reviewing your pensions regularly.

Should I combine my pensions?

Combining or consolidating pensions into one plan may make sense if:

• You want simpler management

• You are paying high charges on older schemes

• You want to access better investment options

However, be cautious if any of your pensions offer:

• Guaranteed annuity rates

• Protected early access ages

• Defined benefit income

• Loyalty bonuses or additional benefits

Always check the terms before transferring and consider taking financial advice.

How do I keep track of all my pensions?

Here are a few tips:

1. Use the Pension Tracing Service at www.gov.uk/find-pension-contact-details

2. Keep a pension folder with statements and contact details

3. Register for each provider’s online portal to track your fund value

4. Create a pensions checklist to review annually

5. Consider speaking to a regulated financial adviser for a full pension review

Final thoughts

There is no limit to the number of pensions you can have, and many people will have several by the time they reach retirement. While this can offer flexibility and choice, it also requires good organisation and regular review to get the most out of your savings.

Whether you choose to keep your pensions separate or combine them, make sure you understand your options and seek advice if needed. Your retirement income may depend on how well you manage your pension pots today.