How To Consolidate Your Pensions

Written by
Tom Lamb
Time to read
3 minutes, 40 seconds

 

If your long-term investment goal is to retire comfortably, then you’ll be investing into a Pension, with the aim of growing a Pension pot that will fund a fulfilling retirement.

It can take decades to build a pot, and in that time you may change jobs regularly, potentially being enrolled into different Pension schemes along the way. This may mean that you end up with multiple Pensions, with multiple charges, in various investment funds.

 

What is Pension consolidation?

Pension consolidation is the process of merging your Pension pots into one Pension. It is as straightforward as identifying what Pensions you have, and then transferring them into one Pension provider.

This means you can see performance in one place, giving you a better idea of how you are progressing towards your retirement goal. It can also mean lower charges, so more of your money can be invested towards retiring.

 

How do you consolidate?

Start by doing research into your different providers, and think about what Pension best matches your retirement goal. Factors such as performance, cost, and the ability to manage your Pension are important. You may wish to discuss this decision with a financial adviser.

Once you’ve decided the provider, this is often as simple as contacting the provider and giving them the details of your other Pensions to transfer in. They’ll typically take it from there and it can be relatively straightforward. It is best to have all your information at hand to give to your Pension provider, and this may mean details such as Pension reference numbers and your National Insurance Number.

Be wary that some Pensions you are invested in may have exit fees and certain Pensions can provide valuable guarantees, such as guaranteed annuity rates, protected higher tax-free cash percentages and protected retirement ages. Some plans, often workplace schemes, also benefit from low charges that cannot be matched elsewhere. These guarantees and benefits could be lost if transferred and therefore Pension consolidation is not right for everyone.

How quickly your Pensions will consolidate really depends on circumstances such as how many Pensions you are consolidating and how long your Pension provider takes to administer the transfers.

 

What are the benefits of consolidating Pensions?

The benefits of Pension consolidation are:

  • It makes it easier for you to track your progress towards retirement, seeing all of your Pension performance in one place.
  • Being in one place could offer the potential for greater growth over the long-term, as you’ll potentially be paying less in fees
  • Ensure your Pensions match your personal attitude to risk. If you are spread across several Pensions you may be in the wrong risk category, and as circumstances change you may need to change risk category. With one Pension you’ll have a clearer view of this.
  • Ensure your investments are diversified. A globally diversified Investment Portfolio means your eggs aren’t all in one basket. Not every Pension fund is diversified, so being in just one Pension could give you a better and clearer view of the Portfolio you are invested in.
You are less likely to forget Pensions if they are all in one place. Currently in the UK there are lost Pensions with a total value estimated to be £26.6 Billion, with three million Pension Pots not matched to their owner[1]. By consolidating you are less likely to lose or forget Pensions as you won’t have multiple investments to juggle. Don’t end up being one of the 50 million dormant and lost pension pots by 2050 which is what the Department for Work and Pensions are predicting.[2]

Take action today

Consolidating Pensions can be quick and easy, so take action today. This could be as straightforward as speaking with a financial adviser, or contacting your Pension provider.

If you think you may have some forgotten or lost Pensions, use the Pension tracing service with the government, or consult our most recent blog on How to find lost Pensions.

 

If you’d like any help cons consolidating your Pensions, True Potential offer a free service open to new and existing clients. You can get in touch with our experts on 0191 625 0350 or by emailing Contact@truepotential.co.uk.

 

With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. This blog is not a personal recommendation or financial advice.

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Date last reviewed: February 23rd, 2024