Can your pensions keep up with you?

If your CV shows a trail of employers, it's likely you need to tidy up your retirement provision. But don't put all your assets into one box until you know what each is worth. Sam Dunn sees how to job-hop without your savings stumbling

Job security has become a thing of the past, along with the concept of a job for life. New figures from researcher Mintel confirm the trend, revealing that the number of people who remain in the same employment for between five and 10 years fell from 21 per cent to 15 per cent between 1986 and 2002.

While such instability may be a price worth paying if you want to progress in your career, it could be costly for your pension fund. Job-hopping usually means a fresh start with a new pension whenever you switch employer.

All companies with five or more staff must offer a pension scheme, and this is usually a contributory one. But if you already have a pension or two from previous jobs, you may have trouble working out whether the scheme on offer is a better deal.

You can't contribute to a company pension once you leave that employment. So if you are starting again with a new pension plan, you could be missing out on potential growth in those schemes you have already joined.

Financial advisers will often suggest consolidating all your funds into one plan (they can boost the commission they receive by recommending such a course of action). But this is not necessarily the best move.

"Consolidation is not always ideal; it depends on the companies you have worked with," warns June Williams, principal associate at independent financial adviser (IFA) Clifton Associates. "For example, a 40-year-old with four small final salary pension pots from company schemes should leave them [there] in most cases. This is because company pension schemes give you an element of protection even after you have left."

Concern about belonging to too many schemes is a good reason to review your retirement provision. The type of pension, or pensions, you have will determine your approach, but don't lump all the money you have saved together in one scheme just for the sake of tidiness.

"Don't jump into consolidation," says Ian Barton, a senior consultant at Smith & Williamson, the professional and financial services group. "It's important to recognise that if somebody has moved around between different jobs, there may be some gains with [each of] the pensions.

"For example, some policies - linked to older contracts, in particular - have guaranteed annuity rates."

Another old perk that might make it worth sticking with a scheme from a previous employer is pension payments which pass to your spouse should you die in service.

If you do belong to a number of schemes - especially if they are a mix of final salary, money purchase and personal plans to which the company contributes - it's worth visiting an IFA that specialises in pensions. An adviser will run projections over your current investments and see what return you can expect from them. This will show whether it's best to transfer your cash to a new fund, or leave things as they are.

John Turton, director of life and pensions at IFA Best-invest, says you must consider three things before changing your pension arrangements: the annual cost of running your schemes; whether they include any worthwhile guarantees; and how well they have performed. The answer in each case will depend on the type of pension you hold.

If you leave a company where you had a final salary scheme, its worth to you will be revalued when you retire and paid out as a monthly sum based on your former salary and how long you were a member of staff. In this case, remember that the annual management cost to your pension pot - which is, in effect, frozen when you leave the job - will be negligible. There may be added benefits such as death-in-service payouts, and you will definitely receive your pension unless the company goes under.

But if you leave behind a money purchase scheme or personal pension, the amount you are likely to receive on retirement will depend on how your pension pot has grown.

Smith & Williamson's Mr Barton adds: "In this case, [your fund's] investment performance is important and charges become very important." Having a number of money purchase or personal pension schemes can cause you to incur lots of unnecessary charges, he warns.

Mr Barton recommends contacting the providers of any schemes you belong to and asking for a projection of how much your pension will be worth. You can then compare the costs and fund performance with those of other providers.

"It's all about knowing what you are giving up," says Martin Wigginton, commercial director of retail pensions at insurer Legal & General. "Even though they seem small now, you need to have [your pension pots] evaluated."