If you have had a number of different jobs during the course of your working life it is quite probable that you will have acquired a range of smaller personal pension funds. For several reasons, it may be a good idea to merge them into one fund (this is called Pension Consolidation) so that you can keep track of your pension funds and plan for your retirement with greater clarity. If all your pension money is in one fund you will be able to see immediately what your personal pension is worth and to manage your fund to suit your purposes, even while you continue to contribute to the total.
These are the immediate benefits, but there are also long-term advantages it would be unfortunate to miss. Having a clear view of your pension assets will give you the information you need to plan for your retirement, allowing you to decide on whether you want to buy an annuity, for example, or take on a drawdown facility which will allow you to withdraw money when you need it, rather like a bank account. You will be able to see how much your single consolidated pension fund is worth, and you will avoid the danger of losing a small pension pot which you may have built in the past.
Having only one pension provider could make every decision easier and clearer to manage, and you will not need to approach various providers, each of whom controls one of your various funds. Charges may also be lower since you will only have to pay one management fee instead of several. Setting up an annuity or taking money from your pension pot in a drawdown will mean paying a management fee to your provider, and if your fund is consolidated you may benefit from the economies of scale, paying a single fee for a single transaction. Many of us do something like this with our credit cards, merging balances together and therefore often paying less in interest at any one time, and when we buy gas and electricity from a single provider we also often save money compared with using two different firms.
It is always easier to manage your retirement finances if they are in one single pension fund, even if you have several accounts within that fund. You may well get a better deal from your pension providers if all your savings are with them, with savings on your management and withdrawal fees.
When considering to combine your pensions, and indeed any other change of plans affecting your long-term finance, you really need to talk to a Financial Conduct Authority regulated financial adviser like us at Pension Works, who will know which is the best route for you and ensure that your precious savings are safe and that your final decisions are the right ones.