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How consolidating your workplace pensions can help

With investing, your capital is at risk and you may get less than what you invested. Tax treatment and any tax benefits depends on your individual circumstances and may change in the future. If you are unsure if a pension is right for you, please seek financial advice.

Oftentimes we leave one job and move to another, yet we forget to transfer our previous workplace pension to a new scheme. And with the average Brit having 11 different jobs during the course of their working life, that can soon add up to a lot in ‘lost’ contributions. 

That number now stands at a vast £26.6 billion in the UK, according to recent research from Mercia. More than 2.8 million pots are thought to be lost, with each worth an average of £9,500, going up to a staggering £16,004 for those aged between 55-75, according to the same research.

When workplace pensions are left ‘inactive’ like this, you could be missing out on the benefits of compounding returns over the course of your retirement savings. This is especially true if your unattended pots were put into a default fund, irrespective of the appropriate risk profile, and are underperforming relative to other pension schemes in the market. 

But the good news for those planning their retirement is that the UK Government has a free Pension Tracing Service so you can track down any of your missing pots. You can find it on the gov.uk website here

Once you’ve found any missing pots, you can then look at past performance, how much you have saved in each and maybe think about consolidating all of your pension schemes into one. 

Why consolidate your workplace pensions?

So, why would you want to bring your pensions together in one place? Here we’ll take a quick look at the reasons why you should consider consolidating your pensions and how it can contribute to a more secure and stress-free retirement.

It’s important to make an informed decision when it comes to transferring your pensions. To help you with this, we suggest that you perform a few checks. Firstly, check that you won’t lose any guarantees or safeguarded benefits if you transfer. Also check whether there are any exit fees or penalties that your existing provider may charge should you choose to transfer. You can find detailed guidance on our Pension Transfer Considerations page. 

  • Manage all your investments in one convenient place – Managing several pension plans can be complex and can carry with it a lot of paperwork. By consolidating multiple workplace pensions, you’ll have just one centralised account to monitor and maintain, making the process much easier.
  • Reduced fees – Multiple pension plans may come with different fees and charges, which can eat into your savings. Consolidation can reduce these costs by streamlining your investments, and you can avoid paying multiple fees.
  • Better investment control – A consolidated pension allows you to make more informed investment decisions and create a diversified portfolio that aligns with your retirement goals. It will also help you to track your investment performance more easily and ensure your money is invested at an appropriate risk level in line with your retirement goals.
  • Easier planning – With a single pension pot, it’s easier to calculate your retirement income and ensure that your retirement pot is sufficient to meet your financial needs in later life.

How Moneyfarm can help 

Take control of your pension pots by consolidating with Moneyfarm. We make the consolidation process simple and convenient, so you can enjoy peace of mind when saving for retirement. 

All you have to do is book an appointment with a member of our investment consultancy team to get started. Once you have the details of the multiple schemes you’d like to consolidate with us, our team can manage the process along with you.

You can book an appointment with one of our consultants by using the booking form here, or simply give us a call and we’ll help guide you through the process. 

Don’t have a Moneyfarm pension?

Opening a pension with us is quick and easy. You’ll enjoy a wide range of benefits when you start saving for your retirement with us, too, including:

  • Tax efficiency – Get up to 25% boost to your pension, without making a claim to HMRC. You may be entitled to more or less than this amount, subject to your tax status.
  • Free drawdown – Start to take benefits from your pension, including the ability to withdraw up to 25% of your pension tax-free as a single lump sum from 55 (this is set to change to 57 on 6 April 2028). You can also pass on your funds to your beneficiaries free of inheritance tax. 
  • Targeted savings to suit your retirement plans – We manage your portfolio around your target retirement date and will update your pension portfolio risk recommendations as the date approaches.
  • Expert guidance, every step of the way – Our team of pension and savings experts are always on hand to help you make the best financial decisions possible. And best of all, all our consultancy services are completely free and only a phone call away.

You can find the full details of a Moneyfarm pension, including how you can open an account in just minutes, on our dedicated page here

If you’d like help consolidating your pensions, opening a new scheme or have any questions, you can book an appointment with a member of our team who’ll help you achieve the retirement you deserve with Moneyfarm. 

 

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*Capital at risk. Tax treatment depends on your individual circumstances and may be subject to change in the future.