Help, should I consolidate my pensions?
It’s not at all uncommon for clients to have a large number of different pension pots which have been accumulated over a number of years, all with different providers.
Often you start a pension with an employer but then when you change employment leave that pension sitting where it is and start up a new plan with your new employer.
As a result after a time you end up with a number of pots. Each provider sends a statement but they are each slightly different, using slightly different assumptions, and received at different times in the year.
It therefore makes it very difficult to compare one against the other and see which has the better performance.
But what’s the right thing to do with them?
Should you automatically consolidate them into one provider?
Having all your pension entitlement with one provider certainly makes for much easier admin. You now only have one statement to aim to get to grips with rather than the handful you had before.
But don’t assume that consolidating your pensions is necessarily the right thing to do. You need to understand what costs you are paying for each provider, what choice of funds each policy has, and whether there are any penalties to transfer.
Getting one statement instead of 4 will not be a good idea if by transferring you have incurred transfer costs or have transferred your money to a fund which has higher charges.
It is more important that you have an overall investment strategy and that your pension investments match your attitude to risk.
Frequently there is some thought put into the investment strategy at the beginning of a plan but it will often not be reviewed after that.
So don’t assume that a number of different pension policies should be accumulated. It may be that the right thing to do is to leave the policy with the existing provider, but maybe tweak the funds you are invested in.
Download a pension case study to see an example of what I can do to help.
If you would like to discuss your pension plans please do call me on 01932 698150. I’d be very happy to have a chat with you and arrange a no obligation meeting if that is the appropriate next step.
photo credit: Flickr/ninopnatividad
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