Over your career, you may work for a number of different firms all with contrasting pension schemes with different pension providers. That means that you’re likely to build up a number of separate pension pots, making it harder to keep track of exactly how much you have saved where and how much you have overall. Pension consolidation is the process of combining all or most of your pension funds into one singular place.

Obviously, this makes things more straightforward and more simple for you, but there are other reasons to consider consolidating your pension.

Working out the best thing to do will depend on a number of factors, including the type of each pension, what they’re currently worth, your plans for retirement, and any potential exit fees to be aware of.

growing pension fund

We spoke with our Financial Adviser, Josh Wilding, for his expert advice on pension consolidation

Arguably, the main advantage of consolidating pensions is to make them a lot easier to manage. If all of your pensions are in one place, you’ll be able to see if you are on track to meet your financial goals – whatever they may be. 

It will help you to project your retirement income and identify any potential shortfalls that need to be addressed. It can also make it much less onerous when it comes to dealing with any paperwork too, as you’ve only got one pension pot to contend with rather than several all over the place.

Consolidating your pensions can save money too

Not only does consolidating your pensions save on time, it can also save on costs as well. If you have multiple pensions with various different providers, you’ll likely be paying administrative fees for the management of each individual pension pot. You always need to be aware of the overall cost of managing your pensions, as these fees will eat into your investment returns. By consolidating your pensions, often you’ll be much more cost-efficient and aware of what the costs actually are.

If you have multiple pensions all in different places, it can be tricky to monitor the performance of all of your investments across these platforms. Some pension providers may place you in funds that are not necessarily right for your current circumstances too. Consolidating your pensions onto a single platform can open up a significantly wider range of opportunities to make your money work harder.

The consolidation of pensions can also provide greater flexibility with how you can access your pension, once you reach retirement. Some pension schemes – in particular, older ones pre-2015 – may not allow you to access your pension in the way that you want to.

By consolidating your pensions into a more modern, flexible plan, you will gain greater control over how you take your benefits in retirement, and additionally, how your pension can be passed on to your beneficiaries.

Are there any downsides to consolidating my pension?

The only potential downside to consolidating your pension funds is that any valuable guarantees and/or benefits that come with your fund could be lost if you transfer out from your current pension scheme. Also, some providers tend to charge exit fees to transfer your funds into another pot, so it’s always worth speaking with a professional financial adviser to see if consolidating your pensions is the right thing for your specific circumstances.

We can also help to advise which pension fund is the highest performing and is most suited to your needs, and then assist with any consolidation to make the process as stress-free and simple as possible for you, our client.

Get in touch today for a free consultation with one of our team.