I’m in my late fifties and have contributed to several different pension schemes during my career, in both private and work schemes. Some of them don’t seem to be performing very well. Should I consolidate them into one scheme?

Matthew Beck from Smith & Pinching responds:

I can’t give you an answer to this question without researching the schemes you have in place and – importantly – without understanding what you are aiming to achieve with your pension savings. However, what I can say is that it would certainly be beneficial for you to talk to a Chartered Financial Planner to review your planning at this stage, before doing anything with your assorted pension funds.

Planning for retirement should always start with your retirement needs and goals. Your various pension schemes are just financial wrappers that allow you to build your investments in a tax-efficient way. You may be able to change the content of the wrappers as and when needed, or combine them. What’s important is that they are taking you in the right direction to meet your goals.

There are three important aspects to consider when looking at consolidating pension schemes. Firstly, it is imperative that you understand if there are any guarantees or additional benefits that may be lost if you move your money out. Secondly, it’s important to check what fees and charges are being levied on the investments in your portfolio. Some older schemes will have higher charges than are normally found nowadays. Thirdly, you will need to explore any penalty charges that will be due if you move your money and balance that against expected improved performance.

There are other factors that may also affect the performance of your pension investments. Some older workplace schemes may have been frozen, particularly if the associated business is no longer trading. This may mean that your pension isn’t being actively managed and performance may suffer as a result. Pension companies have changed over the years too: mergers and buy-outs have happened and that may be having an impact on your funds.

I strongly recommend that you take control of these old schemes to ensure you are getting the maximum benefit and to make sure they are right for you. Please get independent financial advice and build a proper retirement plan that will give you the structure you need to reach your retirement goals.

Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

For more information, please visit www.smith-pinching.co.uk