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Some Do’s and Don’ts of consolidating your finances

With up to £1.7bn of unclaimed assets out there waiting to be claimed, there are some careful decisions to make about if and how you should consolidate.

Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

There’s up to £1.7bn worth of unclaimed investmentssavings and pensions. If they stay unclaimed, money from the pot will go to good causes. Since 2011, £892mn in forgotten savings has gone to those in need.

Recent figures from account finding service, Gretel claim three in ten people could have money lost and languishing in an old account. If you’re one of those people, you might be wondering what you can do with your lost assets if you found them.

To help you keep track of everything, your first thought might be consolidating your lost accounts. While this can be sensible, some things might be better left where they are.

Here are some things to consider when you dig up your old assets.

This is not personalised advice. What to consolidate depends on your personal circumstances. If you’re unsure, seek advice.

Consolidating savings accounts

Do

  • Think about closing old accounts paying next to nothing in interest and move your money somewhere it’ll work harder for you.

  • Have a savings strategy so you can find the right number and mix of savings accounts. Once you have an emergency fund, you can consider fixing cash you won’t need over periods that suit you best. But remember, money cannot be taken out of fixed term accounts until they mature. This could earn you a higher overall rate on your money. Your emergency fund should be three to six months’ worth of essential expenses while you’re working and one to three years’ worth in retirement as a rule of thumb.

Don't

  • Forget the FSCS only protects the first £85,000 held with each banking licence if something goes wrong. Consolidation shouldn’t mean busting this limit. You can still keep your savings in one place with a cash savings platform like Active Savings. So you can take advantage of the best rates from a few different banks and still see them all in one place.

If your savings rate is lower than the rate of inflation, the spending power of your money will reduce over time.

Try HL's Active Savings

You’ll get to choose from a range of products paying competitive rates across a variety of banks and building societies, all in one online account.

Consolidating investment accounts

Do

  • Consider bringing your investments onto a single platform, so you can keep track of them and manage them more easily.

  • Look at your overall portfolio. Having them together helps you check you’re properly diversified and haven’t invested more in some areas than you’d intended.

  • Look at the overall service and value to make sure you’re getting what you need.

  • Check whether you can be paid for the move – because some platforms will periodically offer cashback. You need to check their whole offering suits you, and not just get distracted by the extra cash, but it’s definitely a nice bonus.

Don't

  • Be afraid to transfer ISAs. You can move anything you want from ISAs you paid into in previous tax years. You can move money paid in during this tax year too. But if you want to make this move, you have to move everything paid in this tax year.

  • Forget to check if there are any costs for moving accounts, and whether you might lose any benefits that you need.

Remember, investments can go down as well as up in value and you could get back less than you invest.

Consolidating pensions

Do

  • Take the time to track down old pensions. Especially since auto-enrolment, you might have had pensions with previous employers that you’d forgotten about.

  • Try bringing together as many pensions as makes sense for you. This will cut down on the admin and help you see whether you’re on track for retirement. When you get to retirement, it also helps you make the best possible decisions based on all your retirement savings.

  • Consider the type of pension you move to. This includes everything from fees to service. Consolidating into a Self-Invested Personal Pension (SIPP) could give you far more investment options.

Don't

  • Switch without considering exit fees or charges. These can be expensive, and in some cases means it’s just not worth making the move. Check you’re not going to lose any guaranteed benefits by transferring either.

  • Be in a hurry to switch a defined benefit pension (including final salary pensions).

    These are incredibly valuable, so anyone with a final salary scheme should think long and hard before switching. In most cases it’s not worth it. If you’re unsure, ask for financial advice.

Remember, you’ll usually need to be at least 55 (rising to 57 from 2028) before you can access the money in your pension.

Consolidating with HL

Once you’ve decided what to consolidate, we can help you bring your pensions, and investments all under one roof. And with Active Savings you can see your savings alongside these, using the same login details.

We can help you simplify your finances, get clarity and gain control.

The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money.

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Written by
Nick Colman
Nick Colman
Financial Planning Writer

Nick works closely with our team of financial advisers to deliver insight into financial planning and personal finance topics. His ethos is that everyone should feel confident in making smart financial decisions, big or small.

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Article history
Published: 20th December 2023