One pension pot is preferable to many

People approaching retirement are better off consolidating several smaller pension pots with different providers into one well-invested pension plan, according to research by Defaqto.

David Abbis, insight analyst for wealth management and the author of Defaqto’s guide to self-invested personal pensions (Sipps), said it was easier keeping an eye on the investment performance of just one pension pot.

He said: "Planning can then be made towards retirement, with sensible investing and monitoring hopefully resulting in better performance."

"It is imperative that people in this situation speak to a financial adviser to ensure that they are in a position to obtain the maximum return from their pension investments upon retirement."

Tom McPhail, head of pensions research at Hargreaves Lansdown, said Defaqto was right but warned that a penalty fee may be applicable.

He said: “The only caveat is that investors should check to make sure that they will not incur penalty charges or losing an annuity when moving the money.

"It is far better for investors to consolidate the money. It makes their admin easier. They will be much more able to take a coherent view of their investment strategy if it is in just one pot as opposed to multiple pension pots. One set of money, one set of paperwork and this will save them a great deal lot of time."

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