Pension plans should you consolidate or not ?


Our working life seems to be getting longer and longer. Typically, a career may run for over 45 years and could see retirement age passing 70! Research shows that many of us are likely to changes jobs more than 10 times before retirement and, that could mean ending up with numerous pension plans.

I meet clients who will have multiple pensions sitting on the books of various pension schemes at previous employers. In fact, some people accumulate so many pots that they don’t remember them all when it comes time to retire and, need help to track them down.

Some of my clients see the attraction of consolidating their pots in one place while they’re still working, so they can easily keep up to date on the size of their savings and, how they are invested. Usually, these plans are consolidated into a self-invested personal pension (SIPP).

There are many questions to consider such as what type of pensions do you have? Defined Benefit, Defined Contribution. Does the existing plan retain certain guarantees and what charges are being applied to it? Where is the money invested and how often is that reviewed? Are contributions being made still or, is it paid up? Are there any exit fees to transfer the plan?

When I meet clients seeking advice, the key is to understand their objectives and goals for retirement. Ascertain their views on risk and capacity for loss for example and, whilst learning why consolidation is important to them. All relevant information must be obtained first prior to the analysis stage which will determine if the transfers are possible or not. Typically, I show my clients a cashflow model of their financial position which draws together all their pensions including state and, other investments they may have. Many comment that this is very useful as it allows them to see what their whole retirement stage looks like and, then more confidently make other decisions such as protecting their estate from Inheritance Tax.

The above demonstrates how complicated this decision can be and why it is vitally important to seek professional advice from an authorised Independent Advisor.



This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned about the content hereof and any such action or inaction. Professional advice is necessary for every case.

John Merrifield. Dip PFS, Cert CII (MP).