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Over time, investors often end up unintentionally owning retirement savings products with lots of different providers. Also, when changing jobs, an easy option is to leave your pension benefits to accumulate in your previous employer’s sponsored pension scheme. It is critical that you make considered and sensible financial decisions about what you do with any accumulated retirement savings. Regardless of how many accounts you have and where they are held, you can benefit from consolidating your money in one place.

Retirement savings with multiple providers dents wealth

While it is important to keep saving for retirement, the unintended consequences of having built up benefits in various places without a clear and coordinated investment strategy can be that you unknowingly undermine your wealth. This can happen through duplication of holdings, inappropriate diversification and additional fees.

Why combine your retirement savings?

1. A comprehensive investment strategy will get you the most from your retirement savings

   It can be very difficult to maintain an overall retirement planning strategy that meets your needs when your assets are held in several places. Having all or most of the money you have accumulated for retirement with a single administration provider can help you develop a comprehensive retirement plan that reflects your goals, timing and risk tolerance. This does not mean taking on more investment risk — even with consolidated administration you are able to diversify between investments.

   Note that although your money may all be with one administrator, you may still have several different product accounts so it is important that the administrator is able to provide a consolidated view of investments across accounts.

2. Administration is less complicated

   Your financial adviser and asset manager can help you manage the initial hassle of combining your savings. This process is partly dependant on the fund you are transferring from and can take some time to complete. However, once the process is complete, keeping track of and administering your investments will be less complicated (e.g. you would have a single online log-in and you would receive consolidated statements, showing holdings across all accounts, instead of trying to keep track of multiple account statements from a variety of sources).

3. Lower costs

   You might be able to reduce the cost of maintaining multiple retirement accounts. Some investment platforms charge low or sometimes no fees to serve this purpose.

4. You are better able to identify and plan for any gap in your retirement savings

   By consolidating your investments, you can critically assess how on track you are to retiring with enough money.

Johan de Lange is the Director at Allan Gray Unit Trust Management Limited

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