Consolidating your pension pots is a smart move that can simplify your financial life and help you better plan for retirement. In an ideal world, all your pension savings would be in one account with a single investment strategy. But for many people, that’s not the case. If you have one or more small pension pots in addition to your main fund, it’s worth considering whether to consolidate them or leave them where they are.

Tracking down your lost pots can be the first step in the process. With the average worker having 11 jobs in their career, it’s easy to lose track of pensions. The government is working on a pension schemes bill that includes measures to consolidate small pots, but until then, it’s up to you to do the legwork. Going through old paperwork and contacting former employers or the Pension Tracing Service can help you locate your lost savings and potentially initiate a transfer.

Consolidating your pots has clear benefits. It reduces administrative hassle, allows for easier investment strategy implementation, and simplifies retirement planning. Depending on your age and circumstances, you can move your small pots into a workplace pension or a private one. Reviewing fees, investment options, and charges is crucial when considering where to consolidate your pots. Workplace pension schemes have capped fees at 0.75%, making them a cost-effective option for many investors.

However, there are instances when it may not be advisable to consolidate your pots. Transferring out of a defined benefit scheme or losing safeguarded benefits could harm your long-term financial prospects. Keeping one or two small pots separate can be beneficial, especially if you’re nearing retirement age and want to avoid triggering the money purchase annual allowance (MPAA).

Ultimately, the decision to consolidate or keep your small pots separate depends on your individual circumstances and financial goals. It’s essential to weigh the pros and cons of each option and consider seeking advice from a financial planner to ensure you make the best decision for your future.