A reader asks: I have several different pensions, one frozen from 1995, one private personal pension managed by myself through an investment platform), one 18-year pension managed by trustees (defined/guaranteed final sum) and one ongoing pension with my current employer (maxed out contributions to leverage most from my employer contributions). Is it better or worse to leave them all alone to do their own thing so as to diversify the benefits come retirement in the next few years?
Our response: You should be very careful when moving old pensions just in case, as you say they come with additional benefits in case you lose them. You will need to talk to a professional advisor beforehand. You also need to consider if moving to a cheaper pension provider will compensate for any exit fees you need to pay.
Alex Pugh, Chartered Financial Planner, Partner at Saltus gave this advice:
Consolidating pensions can offer benefits such as reduced paperwork, increased income flexibility, reduced fees, a wider range of investments, and it’s easier to ensure your investments are aligned with your goals. Usually, simplicity is best. However, defined benefit schemes are valuable. Transferring these are high-risk and should only be considered in specific circumstances. Multiple defined contribution schemes can sometimes reduce diversification, because many default funds have similar holdings. Older pensions may have unique benefits, including extra tax-free cash and could incur exit penalties. Transferring could have adverse consequences as well as positive ones. Taking advice prior to consolidating is recommended.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as The Sunday Times, BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
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