Before You Consolidate an Old Pension: Check for Legacy Charges First

The Financial Conduct Authority has published findings from a review of unit-linked pension and savings products, covering the accounts most UK savers with old workplace or personal pensions actually hold. The review's core finding is straightforward but easy to miss if you have not looked at an old pension in years: some customers in legacy products are getting worse value than customers in newer products, and the reasons are almost always structural rather than anything the individual saver did wrong.

What counts as a legacy pension

A legacy or closed product is one the provider no longer sells to new customers, even though existing policyholders remain invested in it. Around half of the policies covered by the FCA's review fell into this category. These products are often decades old, built on older administration systems, and carry charging structures that were standard when they were sold but look complicated and expensive by current standards: a product charge, a fund charge, and sometimes a legacy commission component layered on top of each other.

None of this means every old pension is bad value. The FCA was clear that many unit-linked products, including many legacy ones, do deliver fair value. The issue is that some do not, and because charging structures and data quality vary so much between legacy products, there is no shortcut to knowing which category your own pension falls into without checking.

How to check your own pension

The most direct route is to ask your provider for a fair value assessment of your specific policy, referencing the FCA's Consumer Duty price and value requirements. Firms are expected to be able to show that the price you pay is reasonable relative to the benefits you receive, and good practice identified by the FCA includes firms comparing legacy products against their current open equivalents. If a provider cannot or will not explain how your charges compare to a modern product, that in itself is useful information.

Practical things worth asking for: the total annual charge including any product and fund components combined into one percentage figure, whether the fund you are invested in is still open to new customers or itself legacy and closed, and whether the policy carries any valuable guarantees (such as a guaranteed annuity rate) that a straightforward charges comparison would miss. Guarantees can make an otherwise expensive-looking legacy product worth keeping, so this is not simply a case of moving to whichever provider has the lowest headline fee.

Gone-away customers: check you are not one

A significant portion of legacy pension holders are what the industry calls "gone-away" customers: people the provider has lost contact with, usually after a house move without an updated address on file. If you are gone-away, your provider cannot tell you about a fair value issue with your policy even if one exists, and you will not be contacted proactively about targeted support or a better-value alternative.

If you think you might have lost contact with an old pension provider, the free official route is the government's pension tracing service at gov.uk, which holds contact details for workplace and personal pension schemes and does not charge for the search. Be aware there are privately run services with very similar names to the official government service that are not the same thing and may charge fees; always start at gov.uk directly rather than searching more broadly and clicking the first result.

What targeted support and contractual override actually change

Two regulatory changes are relevant here, and it is worth understanding what each does and does not cover. Targeted support, available from April 2026, allows firms to proactively suggest a specific alternative product to a customer whose existing product may not represent good value, without that suggestion counting as full regulated financial advice. It gives providers more room to act on findings like the FCA's without every customer needing a paid advice appointment.

Separately, the Pension Schemes Act 2026 introduces a contractual override power, allowing providers to move a customer into a better-value product without needing individual consent for each policyholder. This is a meaningful change in principle, but it currently applies to workplace pensions only. If your old pension is a personal or non-workplace pension, the provider does not currently have this power, and firms in the FCA's review said they would support extending it. Until any extension happens, moving a non-workplace legacy pension still generally requires your active decision to transfer.

When consolidation makes sense, and when it does not

Bringing scattered old pensions together into one modern, transparently-charged product is often the right move, particularly if you have several small pots from previous employers that are each individually easy to lose track of. A single, clearly understood pension is also easier to monitor and to plan a retirement income from.

There are cases where consolidating is the wrong call, or at least needs care first. Defined benefit pensions worth £30,000 or more legally require regulated financial advice before transfer, specifically because DB schemes often carry guarantees that are difficult or impossible to value like-for-like against a modern defined contribution product. Some older personal pensions also carry guaranteed annuity rates that were valuable when interest rates were low and may still be worth significantly more than the market rate available today; transferring out of one of these to chase a lower headline fee can cost you more than it saves. And if you are still employed and your employer matches contributions into a current workplace pension, that scheme should generally stay untouched while you are still receiving the match, even if you consolidate everything else.

Why legacy books are so hard to untangle

The FCA's review found that firms often operate multiple administration systems across different product types, with data availability and quality varying across each one. There are hundreds of closed product variants and thousands of unit-linked fund variants still in use across the market, some dating back several decades. This variation is a large part of why a firm cannot simply issue a single, market-wide answer about whether legacy pensions are good or bad value: it genuinely depends on the specific product and fund your money sits in.

Charge complexity compounds the problem. Legacy products often combine several charge components into one bill: a product charge, one or more fund charges, and in some cases components inherited from commission arrangements that would not be sold to a new customer today. The FCA noted this historic complexity makes it harder for customers to understand what they are actually paying and to compare it meaningfully against a modern product with a single, simpler headline charge.

What good practice looks like when firms get this right

The review highlighted specific, concrete steps some firms have already taken. Some identified funds with poorer returns against their benchmark, higher ongoing charges, or overlapping profiles with other funds in their range, and rationalised them, moving customers into better-performing, larger funds. Larger funds performed better on average over the periods reviewed. Firms generally found few legal barriers to this kind of fund-level change: most contracts already give the provider permission to move a customer between funds where doing so is in the customer's interest, for example moving someone out of a fund that is clearly underperforming.

Separately, some firms made material reductions to charges for a significant number of legacy customers, simplifying charging structures, capping annual management charges, and removing charge components no longer considered appropriate, including legacy commission arrangements. Some firms also removed fixed charges specifically for smaller pots, where a flat fee risked eroding a small pot's value disproportionately over time.

Barriers firms cited, and why they should not stop you asking

Firms told the FCA about several genuine obstacles to making changes to legacy products: uncertainty about how the Financial Ombudsman Service might view a change to a long-standing contract, HMRC rules that can complicate proactive changes to pension and savings products, and old administration systems that simply do not produce data granular enough to support a robust, product-by-product fair value assessment.

The FCA's response is worth knowing as a customer, because it changes the calculus for providers. On the Ombudsman point specifically, the regulator noted that if a firm makes changes in good faith to improve customer outcomes, that would be treated as evidence of proactive monitoring consistent with the Consumer Duty, not as an admission that the legacy product was providing unfair value. That reduces one of the main reasons firms give for inertia. On data and systems, the FCA was direct: data and systems limitations do not remove a firm's obligations under the Duty, and where a firm identifies gaps, it is expected to take timely and proportionate action, including system changes if necessary.

None of this guarantees your specific provider will act quickly. But it means that if a provider tells you nothing can be done because of "legacy system limitations" or "risk of an Ombudsman complaint," those are not, on their own, valid reasons under the regulator's own published expectations. It is reasonable to ask your provider directly how they are addressing these specific challenges for your product.

The FCA's own next steps

The regulator has said it will follow up directly with firms on the actions they take in response to this review, and has been explicit that it will take supervisory or regulatory action where it sees inadequate progress, weak evidence, or continuing evidence of legacy customers receiving poor outcomes. Further work on gone-away customers specifically is planned for later in 2026, as part of the FCA's wider programme to modernise pensions and long-term savings, alongside the rollout of pensions dashboards later this year, which should make it significantly easier for savers to see all their pension pots, including old and forgotten ones, in one place.

Checking a provider before you transfer anything

Any firm offering pension consolidation services in the UK must be FCA-authorised. Before transferring anything, verify the receiving provider on the FCA Register directly at register.fca.org.uk rather than relying on a company's own claims about its regulatory status. Pension scams specifically target people moving pensions, often through unsolicited contact promising unusually high returns or urging you to act quickly; a genuine, regulated transfer does not require secrecy or speed.

Once you have decided consolidation is right for you and confirmed the receiving provider is genuinely FCA-authorised, the practical differences between the main consolidation platforms in the UK market come down to fee structure, whether they handle the tracing and transfer work for you, and how much investment choice they offer compared to a fully self-directed SIPP.

Frequently asked questions

How do I know if my pension is a legacy product?

Ask your provider directly whether your policy is still open to new customers or is a closed legacy product, and ask for a fair value assessment comparing your charges to a current open equivalent.

What is a gone-away pension customer?

Someone the pension provider has lost contact with, usually after a house move without an updated address. Gone-away customers cannot be told about fair value issues or offered targeted support until contact is re-established.

Do I need financial advice to consolidate a pension?

Not for standard defined contribution transfers, though it is often useful. Advice is legally required for defined benefit transfers worth £30,000 or more.

How do I check a pension provider is genuine before transferring?

Verify the firm directly on the FCA Register at register.fca.org.uk. Be cautious of unsolicited contact and any request to act quickly or keep the transfer secret.