Low-risk versus high-risk investment for pensions

16 October 2012


A company called Key Personal Finance in Bolton wants to combine the four frozen pension plans I have and place the money in medium to high-risk investments for the next 10 years.I am 53 years old and would like some advice on whether this is a good idea.
MB, Carmarthen


Generally speaking, a medium to high-risk strategy will involve mainly stocks-and-shares-based investments and over 10 years it's very possible that you'll get higher returns than you would if you were to invest in lower-risk investments such as cash, fixed interest and property funds.

However, the value of your investments may drop. If the new pension costs more are you satisfied that any additional costs are for good reason? For example, does it offer access to more funds?


It may simplify your administration to consolidate all of your pensions but make sure you are aware of any transfer costs, which could be significant. If one of your existing pensions already meets your needs it might be more beneficial to transfer all of your other existing pensions into it.

It's important that the pension you end up with suits your needs, rather than simply providing your adviser with a chunk of commission. So, if you are unsure, consider getting a second opinion before you act.

Finally, your adviser should also be following strict "pensions switching" guidelines from the Financial Services Authority.