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Should I consolidate my existing pensions?

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Most people are in the situation where they have accumulated several pension schemes from different workplaces as they progress in their career. It can be tempting to leave a number of pension schemes ‘frozen’ and hedging your bets against risk.

Transferring pensions is not for everyone. However, in my opinion, consolidating your investments into one well-balanced portfolio can be advantageous.

Firstly, it can enable you to keep a closer eye on your investments. Many people simply pay into schemes where they have no real insight into how their money is invested. With one portfolio, you will be inclined to take more of an interest. Where is your money being invested? Are the companies in your portfolio aligned to your own values? The latter is particularly important when you are considering sustainability goals and even issues such as human rights. Taking more of an interest gives individuals more control as to where they want their investments made. It also forces pension providers to become more responsible as to where they invest. For example, if every company in the UK insisted on providing a carbon-neutral pension for every employee, great change will happen as pensions make up a large part of the financial markets.

Secondly, consolidating your pension will force you to address your goals at retirement. You can’t rely on different pension plans to make up the deficit. With pension plans becoming more flexible, you can change the amount you put into your pension plan to keep up with your changing goals and personal circumstances.

Moreover, consolidating your pension will simplify your finances and make it easier to factor in pension income in the wider remit of your overall investments. It will be easier to pass on to beneficiaries in your will and simpler when factoring in tax relief. I would advise people to seek professional help when considering consolidation however, so that you can be sure that you are not giving up any valuable benefits in the process.

Please don’t hesitate to contact me or a member of the financial planning team if you would like any help or advice with your pension.

Michael Lapham director of financial planning

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