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The benefits of pension consolidation

For a lot of us, retirement planning feels like a long way away. With decades of work to get through before we retire, it’s easy to prioritise other more short-term financial goals rather than sitting down and meticulously planning for life after work.

It is, however, important to have a clear understanding of your retirement savings. This has only become more pressing lately, with high inflation chipping away at cash savings over time and the cost of living making it more difficult to save.

It’s easy to lose track of pots

The average person in the UK will have over 10 different jobs throughout their career. With different employers using different workplace pension services, this often leads to people having a number of different pots spread across different providers.

This means some pension pots are left dormant. This is before you consider the Self Invested Personal Pensions that someone might have on top. So, it’s extremely easy to lose track of not only who manages your pensions but how much cash you have in each one. In fact, as many as one in five say that they’ve lost track of at least one pension completely.

One of the main ways of tackling this problem is through consolidation. This is tracking down your various pensions and bringing them all together in one, manageable pot. So, first, you need to track down your dormant pension schemes.

Luckily, the government introduced a pension tracing service in 2016, which allows you to track down any lost or dormant pensions. The process is surprisingly straightforward and we will include a link below to access this. Once you’ve found your pensions, you can then think about consolidating them. Meaning they can be invested, managed and even drawn down in one place.

How and why should I consolidate?

Let’s look at how you can consolidate your pensions, before thinking about why you might want to. The good news here is that pension consolidation is straightforward these days. Most providers – including Moneyfarm – can manage your pension transfer from start to finish, with the process taking between a few weeks to a few months to complete, depending on some variables. Either way, we’ll manage the entire process.

So, why would you want to bring your pensions together in one place? The first reason is control. When your pensions are spread out between various different pots, they’re managed separately and you can easily lose track of them, so it can be difficult to stay on top of charges, performance and other key investment variables.

Charges are a key thing to consider. Multiple pots with multiple providers means multiple charges. This is because providers will ordinarily charge a higher percentage in fees to lower account values. So, if you have smaller pots with each different provider, you’re likely paying more in fees than if you had one larger pot with one provider. 

Another key consideration is simplicity. It can be time-consuming and arduous to keep track of various different investment pots, particularly when it comes to planning your retirement in more detail down the line. When it comes to figuring out how much income you want to take and over what time period, having your cash together in one place will simplify the whole process. 

Dealing with one provider, one time, can be an absolute lifesaver when it comes to taking income in retirement. 

As with any investment decision, there are pros and cons which you should consider before consolidating. However, pension consolidation in general is seen to be a great way to simplify retirement planning and maximise your wealth. 

As always, if you wish to discuss your retirement options please reach out to our investment consultant team on or our phone lines.

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