I consolidated all of my workplace pensions, and how you can too!

TLDR

I consolidated my workplace pensions so I could have better control and shift it into high-growth funds like the S&P 500. This was inspired by the performance of tech companies like Nvidia (4x in 3 years), Tesla (10x in 5 years), Meta (2x rebound), etc. My default portfolio was underweight in tech and missing these opportunities.

I listed my old employers, requested pension details using a simple email template, and consolidated them through platforms like PensionBee. Then, I chose an investment strategy aligned with my goals, such as US stocks, tech, or emerging markets.

How I consolidated all my workplace pensions!

First things first, I used PensionBee, it was pretty quickly and if you click this link I’ll get a referral bonus, it won’t cost you anything.

If you're like me, you've probably built up a few workplace pensions over the years that are sitting in the background, forgotten or ignored. Recently, I decided to consolidate mine and take control of where it's invested. Instead of sticking with the default "balanced portfolio" in most pension schemes, I plan to transfer it out of PensionBee and switch to another pension provider so I can shift my funds towards indexes like the S&P 500, which has consistently outperformed many other markets, and also individual stocks. It will cost be 0.5% in a transfer fee when I move the money however for me it’s worth it to have a seamless process which I quite frankly wasn’t going to follow up with myself. Here's how and why I did it—and how you can too.

Why Consolidate and Reassess Your Pensions?

Before going into how I did it, it may be useful to understand why.

The Growth of US Markets:
If you're wondering why I chose to redirect my pension funds toward the S&P 500, here’s the key: historical performance. Over the last 10 years (as of 2023), here's how the major indices have performed:

• S&P 500: ~10.9% annualized growth

• NASDAQ: ~14.2% annualized growth (driven by tech-heavy companies)

• Dow Jones (DJ30): ~8.9% annualized growth

• FTSE 100 (UK): ~3.8% annualized growth

When you compare these numbers, it’s clear that US markets, especially the S&P 500 and NASDAQ, have far outpaced the FTSE 100. The FTSE's focus on financials, energy, and legacy sectors has historically limited its growth compared to the US's innovation-driven economy, particularly in the technology sector.

The Default “Balanced Portfolio” Trap:
Most pension providers automatically allocate your contributions into "balanced portfolios." These typically diversify across:

• Equities (Stocks)

• Bonds

• Money Market Instruments

• Foreign Exchange (FX)

While this is designed to reduce risk, it might not align with your specific needs, especially if you're younger and have decades before retirement. Many "balanced" portfolios are overly cautious for those in their 20s, 30s, or 40s, with heavy allocations to bonds and low-growth investments.

If I had to estimate, I’d wager that my pension would be three times as large now had I invested in the S&P and a few growth stocks over the last 5 years as opossed to balanced portfolios.

What the Experts Say:
Investment guru Warren Buffett famously said, "For most people, the best thing is to own the S&P 500 index fund and forget about it." Additionally, general advice for asset allocation by age is:

• 100% equities in your 20s and 30s, when you have time to ride out market volatility.

• Gradually increase allocation to bonds and cash equivalents in your 50s and 60s as retirement nears.

I realized my pension’s default allocation wasn’t optimized for my age and risk tolerance. I’m in my 30s, so it made sense to have a more risk on portfolio for my pension.

The Catalyst: Missing Out on Tech’s Incredible Growth

What really motivated me to take charge of my pension was seeing the incredible returns from individual tech companies over the past few years. For example:

• Nvidia (NVDA): Over the past five years, Nvidia's stock has appreciated approximately 2175%, reflecting significant growth in the AI and semiconductor sectors.

• Meta Platforms (META): has achieved 181% over the last 5 years and 500% over the last 2 years, after a major dip.

• Tesla (TSLA): Over the past five years, Tesla's stock has experienced substantial growth, increasing nearly tenfold at its peak, though it has faced volatility in recent times.

These companies—and many others in the tech sector—have been driving much of the growth in indices like the NASDAQ and S&P 500. My default pension was underweight in tech, so I felt like I was missing out on these opportunities.

Long-Term Investing Mindset

Because I don’t plan to touch this money for the next 25-40 years, I’m comfortable taking a more aggressive approach. Here’s why:

1. Weathering Downturns: Market dips are inevitable, but with a long-term horizon, I can ride out volatility and even use it as an opportunity to buy more at lower prices.

2. Focus on Growth: Younger investors can afford to focus on high-growth areas like:

   • US markets (S&P 500, NASDAQ)

   • Emerging and frontier markets

   • Innovative companies in sectors like AI, green energy, and biotech

3. The Power of Compounding: Investing heavily in stocks now allows me to take full advantage of compounding returns over the decades.

How to Take Control of Your Pension

If you’re inspired to consolidate and optimize your pension like I did, here’s how you can start:

1. List Your Old Employers
   Write down every company you’ve worked for and check if you participated in their workplace pension scheme.

2. Contact Employers for Pension Details
   If you don’t have the paperwork, email your former employers’ HR teams to get the details. Use this template:

   *I should note I didn’t have to depend on this step for every single employer because my wife does a great job of keeping these types of records, so some I already had.
   

Subject: Request for Information on Workplace Pension

Dear [Employer's Name/HR Team],

I hope this email finds you well. I previously worked at [Company Name] from [Start Date] to [End Date] and participated in the workplace pension scheme during my employment.

Could you please provide me with the details of my pension, including the provider, policy/account number, and approximate balance?

Thank you in advance for your assistance. I look forward to hearing from you.

Best regards,
[Your Full Name]
[Your Contact Information]

3. Choose a Consolidation Platform
   Platforms like PensionBee (UK) or similar providers make it easy to transfer multiple pensions into one pot. They’ll handle most of the process for you.

4. Using PensionBee: Using PensionBee is incredibly simple, all you need to do is insert the pension provider, and your policy number and the handle the rest for you.

5. Select Your Investment Strategy
   Once consolidated, you’ll need to choose where your money is invested. I personally went for a fund heavily weighted in the S&P 500 and US tech stocks, but the choice will depend on your goals and risk tolerance.

Final Thoughts

Taking control of your pension is one of the most empowering financial decisions you can make. By consolidating your pensions and aligning your investments with your age, risk tolerance, and goals, you can set yourself up for long-term growth and financial freedom.

For me, shifting to US markets and tech-heavy investments was the right choice. It’s not for everyone, but if you have time on your side and are comfortable with some risk, it might be worth exploring.

Let me know if you have any questions or need guidance—happy to help!

Let me know if this works for you!