Job changes are a fact of life. The so-called ‘portfolio career’ - where people cycle through a series of roles over their working lives - is now characteristic of the employment market. Whether by choice or necessity, more and more people are moving between jobs, companies and sectors.
This complicates retirement planning. By mid-career, your pension investment portfolio can be as diverse as your job history: a PRSA here, a buy-out bond there, a dormant defined benefit scheme. It can get unwieldy and difficult to keep track of. Worse, it can cost you in the long run – not just in fees, but in poor investment allocation or hidden risks.
That’s why consolidating your pensions into a single, easier to manage structure might be a good idea. It is one simple, painless and powerful change you can make to your portfolio that can pay dividends both now and in the future.
The fees are reason enough to do it. Imagine each of your separate pension funds as a partly-filled bucket riven with tiny leaks – policy fees, pension board fees, plan charges, fund management charges, etc. You’re trying to fill it up, but the water keeps draining out into somebody else’s bucket. You simply can’t plug all the holes at once. One big bucket with just one or two small leaks would be easier to manage and you’d lose less water.
It’s the same with pension investments. Moving everything into a single account instantly gives you economies of scale. A large fund in one place can offer you more pricing power to negotiate lower fees, too. After all, every euro you save in fees is a euro that compounds over time. This approach also can provide you more practical control over your investment decisions for enhanced allocation, which makes risk and return easier to manage.