Should I consolidate my pensions?

People often want to know if they should consolidate their pensions and what value an advisor can add, when they can do it themselves or get an execution only firm to do it for them (i.e. with admin fees, but without an advice fee). On occasion, people also forget they have old pensions as they don’t update their pension scheme on their address when they move, but that is a whole other topic.

My starting point is that you shouldn’t transfer a pension purely for ease of administration. Of course it is a factor, but consolidating is unlikely to be in your best interests for that reason alone.

Individuals sometimes consolidate their pensions when moving jobs but here is why you should consider taking advice. Factors that need to be considered include:

• What level of risk are you taking, is that catered for within your pension (and is it up to date);
• Is any advice you received unrestricted and independent;
• Can you invest in line with any ethical, environmental, social or governance factors which are important to you;
• Is there a limited or wide range of funds and fund houses available;
• What are the costs and are those justified;
• Are there are guarantees such as guaranteed annuity rates, protected tax-free cash;
• Is your existing plan a with profits fund and would you lose any terminal bonuses;
• Is the pension wrapper flexible, do you have access to flexi-access drawdown and is this appropriate for your retirement needs;
• Does your existing plan provide life cover or death benefits;
• Are there any pension sharing or earmarking orders;
• Do you want your funds to be actively managed on your behalf.

If you do not get advice, you may not know whether you are losing any valuable benefits and may be worse off, even after factoring in advice fees.

If you’re reading this and finding you have more questions than you realised, or would value professional advice, you should consider instructing an independent financial adviser to review your pensions on your behalf.

The value of your investments can fall as well as rise and is not guaranteed.