Pension consolidation simply means combining all – or most – of your pensions with a single provider.
Collecting a bunch of pensions from old jobs is increasingly common. In fact, US data suggests people these days will have had ten jobs by the time they hit 40. If a pension comes with each job, you can imagine how tracking your money can becomes hard to manage.
In Ireland, we’re not far behind. By the time you’re in your forties, many people have had several jobs for, say, 3-5 years each, and amassed a reasonable pension pot in each.
So what should you do about it?
First things first – if you’ve just left your job, you’ve got an immediate decision to make about what to do with your pension. Read all about your options here.
If you’ve several pensions, then there are three steps to consider:
1. Don’t lose track of your old pension
Don’t leave money on the table. You earned it – and just because it is from an old job doesn’t mean it has gone away, or isn’t still your money.
At a minimum, put some basic details about it on a list in your sock drawer. Better still, if it’s a small pension, you might be able to tidy it up by moving it into your current pension.
2. Improve it if you can
There’s almost certainly something you can do to improve a pension from an old job.
That might be as simple as getting an up-to-date valuation, or correcting the address on file.
Or it might involve getting a real grip on it, getting financial advice on it, moving from the old provider, and getting transparency and control over investment choice and costs, as we’ve explained here.
3. Consolidating several pensions
This is the ‘all the trimmings’ option. If you want full ownership of your pension pots, and clarity on your path to retirement, you should consider it seriously.
Here, you can take stock of all your old pensions, and create a unified approach. You might plan for different lump sums and pensions to be drawn down at different stages, for example. You might tap up the first one as a fiftieth birthday bonanza, or clear the mortgage, whereas another might be kept in its tax-free wrapper until you’re in your seventies.
You’d have a single investment strategy across all of your pensions. And you’d be clear in your own mind what part each pension can really play in building up your long-term wealth.
Clearly, there’s a balance to be had. Most of us don’t want to spend half a day moving an old pension if it won’t make a decent difference to our retirement.
But for a pension worth €5,000 or more – and especially if you have a few of them from several old jobs – it is generally worth the effort.
Where to start? You can contact us here, or have a read on our blog to find out more on your particular situation. Here are some links that might help:
If you’ve received a ‘leaving service options’ letter.
If you’ve moved back to Ireland from the UK.
If you’re thinking about a Personal Retirement Bond.
