Should I consolidate my pensions?

Great question, and this is the sort of thing we get asked about all the time.

After a few years of working, and possibly for multiple employers, you may find yourself with a number of different pensions and wondering what to do with them.

You may even have pensions that you’ve forgotten about, which is much more common than you might think – research commissioned by the Association of British Insurers (1) found that there are an estimated 1.6 million pension pots worth £19.4 billion unclaimed. That’s an average of £13,000 per pot!

Pensions can be confusing at the best of times, and you’d be forgiven for leaving it until nearer retirement to begin sorting them out. As you can see from our section on ‘The different types of pensions’, they vary so much and can carry with them different benefits and possibly even valuable guarantees which require specialist advice.

If you have more than one plan, it can make it more difficult to keep track and to ensure that they are working hard towards your retirement. Broadly speaking, it’s never too late to take a closer look at your retirement plans, and more specifically at your pensions to get them fit for the future.

So, what are the benefits of reviewing your plans way ahead of your retirement?

Here are some reasons:

1. Right place, right time and for the right reasons

You can ensure that your pension investments are in the right place, for the right amount of time, and for the right reasons – we’ve seen an increase in people’s awareness of the need to invest in a responsible way which is ethical and good for the environment. This can also be a great opportunity to really look ahead at your plans for later on in life, and how best to achieve them.

2. Keep things simple

Having a potentially simpler arrangement will make it easier for you to see where you are now. You are likely to become increasingly more engaged and knowledgeable about your plans, if they become less complicated. In turn it will make the task of identifying ways to maximise what you can save a lot clearer and more effective – research (2) has proven that discussing and quantifying future goals with the help of an expert can significantly increase your wealth.

3. Lower costs

You may be able to benefit from lower charges on your plans – one plan with a larger value compared to multiple smaller plans can help to reduce your charges.

4. Make new contributions

Your existing plans may not permit any new contributions – this is the perfect chance to review what you are paying in, and how you can still make a difference.

Moving or consolidating your pensions isn’t always the best thing to do.

As with most things in life, there are some additional things to think about, some of which may mean you need specialist advice or you might be best to leave them where they are:

• You may have valuable guarantees that can be lost on transfer.
• There may be penalties or fees associated with moving a pension.
• Your employer is likely to be contributing to one of your plans.
• If you’re self-employed or run your own company, you can make some additional choices about how and when to contribute.

As you can see, there’s a lot to consider. Thankfully help is at hand to reduce the risk of making a mistake!

At MyRetirement, our Retirement Specialists are expertly placed to help guide and if appropriate, advise you on the best solution to meet your retirement goals, whatever they may be, and across all types of pensions.

Source data:

[1] £19.4 billion of pension pots unclaimed – just because of house moves ABI

[2] What it’s worth – Revisiting the value of financial advice – ILCUK