How many pensions can you have?

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Updated on
October 8, 2022

In a nutshell

You can have as many pensions as you want! Having both a workplace pension and a personal pension is a great way to boost your retirement income. But we’d steer clear of keeping tons of old pensions lying around as they could easily get lost – instead, consolidating them could make them easier to manage.

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Pensions are awesome. There, we said it! They’re specially designed to help you save for retirement, which means they make it oh-so-easy to stash money away so you can enjoy your golden years to the fullest.

But is it possible to have too much of a good thing? Well, there’s no limit to the number of pensions you can have, and having both a workplace pension and a personal pension is a great way to boost your retirement income. However, you probably don’t want to have too many pensions as they could easily get lost! Here’s the full lowdown.

Can I have more than one pension? Really?

Yes, yes and yes again! You can have more than one pension. In fact, you could have 40 if you wanted (not that we’re recommending you get 40 pensions… they’d probably be hard to keep track of!).

How many pensions can you have?

Having said that, even though there aren’t any limits to the number of pensions you can have, there are some other limits you’ll need to bear in mind when it comes to how much you can pay into them. Let’s take a look at some of those here.

Workplace pensions

A workplace pension is a pension that’s set up for you by your employer. This is different from personal pensions, which you set up yourself. (Wait, what’s a personal pension?).

With a workplace pension, you usually have to contribute 5% of your earnings to your pension each month. But the really great news is that your employer has to contribute too – at least 3% of your earnings, straight from their own pocket!

Workplace pension

Anyway, the point is that you can have as many workplace pensions as you want. In fact, the chances are you’ll have a few by the time you retire, as each time you change jobs, you’ll be set up a new workplace pension by your new employer. The average worker in the UK changes jobs 5 times (according to AAT). So, we’ll let you do the maths.

old-pensions-can-get-lost

HOWEVER even though there’s no limit to the number of workplace pensions you can have, you can only pay into one at a time. In other words, you can have lots of workplace pensions lying around waiting for you to retire, but they all have to be ‘dormant’ other than the one your current employer has set up for you (a dormant pension is one you and your employer are no longer paying into).

Instead, if you want to pay into more than one pension at once, you’ll need to start a personal pension alongside your workplace one. Hint: this is a really sensible idea and can be a great way to boost your income in retirement!

Annual allowance

Technically, you can pay as much as you want into your pensions each year. But if you want to get all the tax benefits that pensions normally come with, you’ll need to make sure that you don’t go over a limit set by the government, known as the annual allowance. 

At the moment, the annual allowance is £40,000 or 100% of your salary – whichever is lower.

Pension annual allowance

In other words, if you earn £30,000 per year, your annual allowance will be… wait for it… £30,000 – it’s equal to your salary because you’re earning under £40,000. On the other hand, if you earn £50,000 per year, your annual allowance will be £40,000 – because you’ve earned more than £40,000. Makes sense, right?!

The only exception is if you’re over the age of 55 and you’re already taking an income from your pension. In this case, your annual allowance will be much lower – normally just £4,000. 

So, what does this all mean in practice?

Well, if you stay under the annual allowance, you won’t have to pay tax on any earnings (like your salary) that you pay into your pension. This is known as tax relief and is the government’s way of helping you to boost your savings for retirement!

Workplace pension tax relief

However, if you go over your annual allowance, you won’t be able to claim that sweet, sweet tax relief on the extra money – which might mean you’re better off doing something else with it instead (for instance, stashing it away into another kind of savings account, like a Stocks & Shares ISA).

Lifetime allowance

Finally, you’ll also have another limit to bear in mind – the pension lifetime allowance. This refers to how much you can withdraw from pensions overall during your lifetime, without facing an extra tax charge.

The lifetime allowance is currently £1.073 million – and it’s set to stay that way until at least 2026.

Pension – Lifetime allowance

If you’re thinking ‘woah, that sounds like a lot!’ then yep, in some ways, you’re right. However, it’s a lot easier to hit the lifetime allowance than you might think, as pensions are specially designed to help you grow your savings for retirement.

Think about it: if you have a workplace pension, your employer will be contributing as well as you. And if you have a personal pension, the tax relief you claim will get refunded straight into your pension pot, boosting your savings (our guide to how much you can pay into your pension has more on this!). 

Personal pension tax relief

Plus, your pension provider (that’s the company looking after your pension) will also spend time trying to grow your money by investing it (that’s when they use it to buy things like stocks and shares, which means you’ll own a tiny portion of different companies). The idea is that as your investments increase in value, your savings do too!

All this means that if you start saving early and you pay a lot into your pension each year, you could end up hitting the lifetime allowance without meaning to.

Pension growth

If that happens, the bad news is that you’ll be taxed pretty heavily on any money you withdraw from your pension over the allowance. We’re talking 25% tax if you take it as income, or 55% tax if you’re taking a lump sum. Gulp!

The good news? Well, if you go over your allowance, it’s a nice problem to have! Even so, it’s best to seek professional advice if you’re facing hefty tax charges like these – Unbiased¹ can help you find the right financial advisor for you, to support you in making the best decisions when it comes to your pension.

Is it a good idea to have more than one pension?

Yes! If you have a workplace pension already and you have some extra cash, we’d usually recommend setting up a personal pension alongside it. A personal pension can be a great way to boost your income in retirement – and it’s generally a much better shout than increasing your workplace pension contributions. 

Not only is a personal pension flexible (most modern personal pension providers like PensionBee and Penfold will let you pay in as much or as little as you want, whenever you want). But you’ll also be able to choose your own pension provider – unlike with a workplace pension, where your employer will pick out a pension provider for you. That means you’ll usually be able to choose a pension provider that has cheap fees and a great track record for growing pension savings quickly – we’ve put together a list of the best private pension providers so you can easily compare them.

Best personal pensions

Find the best personal pension for you – you could be £1,000s better off.

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PensionBee

PensionBee are leading the way with modernising pensions. The investment options are great for many pension savers, it’s an awesome app and website, which are both easy to use, and have tools and charts to show you how your money is growing – and importantly, how to hit your retirement goals.

It's easy to set up and get going, you can start a brand new pension, or simply transfer your existing pensions across.

You’ll pay one simple fee that decreases the more you save.

Fees: low (0.5% to 0.75%) for their core plans

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Our friends at PensionBee are giving our readers a £50 pension contribution when they sign up with Nuts About Money too, just use the button below to get started.

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Simple and easy

Penfold

Penfold is a great app to get you going, with simple pension fund options to choose from and awesome features on the app to view your money at any time. Plus simple tables and charts to work out how much you should be investing to hit your retirement goals.

You don’t need an existing pension to use it, but if you do have one, or a few, you can move those overs too.

Fees: low (0.75% or 0.88%)

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Having said that, having LOTS of pensions can have its challenges. The main one is that they can… well… get lost!

We know what you’re thinking: ‘how could you lose a pension?!’ Well, it’s actually quite easy to do. In fact, The Association of British Insurers found that there are around 1.6 million lost pension pots in the UK, worth around £19.4 billion altogether!

This is often because when people change jobs loads, they end up with lots of dormant workplace pensions that are just sitting there waiting for them to retire. 

In this case, instead of having lots of old pensions lying around, you could consolidate your pensions – that’s when you transfer all your old pensions over to one new personal pension. This way, they’ll be much easier to keep track of and less likely to get lost. Win win!

Transfer old pensions to apersonal pension

So, more than one pension or no? What’s the verdict?

Well, we’d recommend having a workplace pension and a personal pension if you’re looking to boost your income during retirement. But we’d steer clear of having tons of old pensions you’re no longer contributing to. After all, the last thing you want is to go and lose some of your hard-earned cash!

How many pensions can you have on top of your State Pension?

Finally, you might be wondering ‘where does the State Pension come into all this?’ 

Well, for those of you who don’t know, the State Pension is a weekly payment you’ll probably be able to get from the government once you hit State Pension age – that’s currently 66, but it’s gradually climbing to 68. And guess what? You can have as many pensions on top of your State Pension as you fancy!

State Pension age

That’s right, if you qualify for the State Pension – which you normally will if you’ve paid enough National Insurance contributions throughout your working life (that’s a payment you make to the government alongside your taxes) – then you’ll be able to claim this weekly payment from the government regardless of any other forms of income.

In other words, it makes no difference whether you’re still working, retired, earning a fortune through other pensions or living off just your State Pension. If you qualify for it, you’ll get the State Pension all the same.

The full State Pension (meaning the maximum you can get) is currently £185.15 per week, which comes to £9,628 per year. So, although it’s super nice to have, it’s not a lot – many people would struggle to live on that alone.

Full State Pension

With that in mind, having another pension alongside your State Pension is very sensible. Whether it’s a workplace pension or a personal pension (or both!), it’ll help you to boost your retirement income so you can afford to live your sunset years to the full (cruise around the Caribbean, anyone?!).

Let’s recap

So, to summarise, you can have as many pensions as you want! You just need to be a little bit careful about how much you pay into them, to make sure you can reap all of their lovely tax benefits.

There’s not much point having loads of old workplace pensions lying around, so we’d normally recommend consolidating them all in one place to make them easier to manage (we don’t want any getting lost now, do we?!). But we would recommend starting a personal pension alongside your workplace pension, if you’ve already got one of those – assuming you have some spare cash you want to set aside for retirement, of course!

And if you’re self-employed, retirement planning is essential as you won’t be paying into a workplace pension scheme. We recommend definitely opening a personal pension! Your future self will thank you (a lot) when it comes to retiring and making the most of your juicy retirement income.

By starting a personal pension, you’ll be able to choose a pension provider with low fees and a good track record for growing money quickly. Which means it’s a great move for boosting your retirement income and allowing you to live out your sunset years to the full!

If you’re not sure where to start, just check out our selection of the best personal pensions. Then, get saving – you’ll thank yourself later!

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Best personal pensions

Find the best personal pension for you – you could be £1,000s better off.

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This article was written by the team at Nuts About Money, and fact-checked by 2 independent reviewers. You’re in safe hands.

Best personal pensions

Find the best personal pension for you – you could be £1,000s better off.

Best personal pensionsBest personal pensions

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