This is a query that I am asked quite frequently so I decided to put the common answers into a FAQ [broken link removed]. Here's the main thrust of it...
CONVENIENCE
Having all your pension funds in one place is convenient and easy to keep track of. You'll get a single statement. You may have online access where you can view all your funds at once. If you want to enquire about your pension funds or make changes to where they're invested, everything is in the one place. While this convenience has a value, in my opinion it's one of the least important aspects of the decision.
PHASED RETIREMENT
If you amalgamate all your pension funds into one scheme, then you can only retire once. This might seem like an odd statement - you might think that, like being born or dying, you'll only retire once. But in this context, retiring means drawing down the money from your pension funds. If all your funds are in the one pension scheme, then unless it's a PRSA you only have one opportunity to start drawing your benefits. If you have multiple pension "pots" then you can draw on different ones at different times. Nowadays more and more people are looking into the possibilities of phasing into retirement, perhaps cutting down to part-time hours for a few years before finally giving up paid work altogether. Some people want to spend a few years pursuing a different job that might be of greater interest to them but is not terribly well-paid. Having a number of different pension pots allows you the flexibility to draw on one to supplement a reduction in earned income, while leaving other pots to be drawn down later.
INVESTMENT CHOICE
Before deciding whether or not to amalgamate two or more pension funds, you need to look at how both are invested. This may require a bit of homework. In relation to the funds you are thinking about transferring, find out where they're invested and get a fact-sheet in relation to the fund(s) where they are now. Then get the same details in respect of the pension arrangement where you're thinking of transferring to. Compare the two and make sure that you understand and are happy with the fund choices on both the transferring arrangement and the proposed recipient, before deciding to move from one to the other.
CHARGES
While doing your homework, find out how what the ongoing charges are on the fund you're thinking about transferring. This would usually be an annual charge as a percentage of the fund. Then find out what the charges would be if you transfer that fund into your current pension scheme. When making your enquiries, make sure that you get answers in language that you understand, without jargon. If the charges on the new scheme are higher than the current home of the fund, then perhaps you need to leave the existing fund where it is, unless some of the other considerations justify the extra cost.
CONTROL & TRUSTEESHIP
If your existing fund is in an Occupational Pension Scheme, there are trustees appointed to oversee the scheme. These will usually be a professional trustee, the employer company, specific members of staff or combinations of these. The trustee can make certain decisions in relation to the scheme, e.g. the trustee can decide to move all funds from one pension fund manager to another without your agreement. When you eventually want to draw your funds from the scheme, the trustees will need to countersign your application. So if you have left the employment, you will need to keep an eye on who the trustees of your pension scheme are, as you'll need to be able to contact them. By transferring your funds into a policy in your own name, you take on full control of which provider your funds are with and how they are invested, up to and including full control using a self-administered product. You are also removing the trustees from having any involvement with your fund and you can sign all documents yourself.
WARNINGS
Before deciding to transfer from one pension fund to another, make sure that there are no penalties for transferring the existing fund. Make sure also that the existing fund doesn't contain valuable guarantees or bonuses that you would forfeit if you transfer away. In particular, if your existing fund is in a Defined Benefit (DB) pension scheme, be very cautious before deciding to transfer out. Such DB schemes contain guaranteed pensions that can be very valuable as long as the DB scheme itself is able to pay out the promised pensions.