This new way of working has its benefits, but it also comes with challenges. And if you’ve paid into multiple pensions from various employers, as well as any personal pensions, it can be challenging to keep track of how they’re all performing – and even where they are. Without action, you risk leaving a long-forgotten pension (or two, or three) festering away in a poorly managed fund, subject to fees that gradually erode its value, rather than maximising your total retirement pot.

Combining all of your pensions in one place (a process called pension consolidation) makes them a lot easier to manage – and less likely you’ll lose one altogether. The Association of British Insurers (ABI) estimate that over 1.6 million people have missing and unclaimed pension pots worth a total of almost £20 billion. Most of them remain unclaimed because the holder has moved address and the pension provider has been unable to contact them.

Alongside the benefits, there are also risks involved with pension consolidation. That means it’s always important to seek professional advice when making important decisions about your pensions.

Here, we outline some of the key things to consider before you look at making any changes.

As we’ve already mentioned, knowing where your pensions are is critical. And keeping them in one place means you’ll not only be able to claim them when the time comes, but you’ll also know exactly how much you’re projected to have when you retire.

You never know, you may find you have more than you thought, allowing you to retire early, or you might not have enough. Either way, it’s better to find out before it’s too late so you can increase your contributions.

Pulling all of your pensions into a single scheme can significantly reduce the amount of admin required, versus managing lots of different pension posts with multiple providers. It also allows you to ensure your pension investments continue to reflect your values, risk profile and goals, which may change over time.

Having everything in one place will make it easier to track where you are, so you have the peace of mind that you’ll have saved the funds you need to enjoy your retirement.

If you have multiple pension funds, you’ll pay administration fees to multiple providers. Some providers are more expensive than others, but it’s tricky to get a picture of how much you’re paying to pension providers when you have so many.

Administrative costs can rack up over the years, and these costs will be taken directly from your pension pot. Over the course of 30 years or so, and combined with the impact of inflation, this can gradually erode the value of your fund – particularly if you have stopped paying in. So it’s important to understand precisely what you’re paying and consider switching away from high-cost funds.

If you leave your pension funds untracked and unchecked for years, your money could be sitting in an underperforming, high-fee pension fund.

Your investment provider might not be making the right investment decisions that will boost your retirement fund. This is something you may not necessarily know, either because you’re not sure where your pensions are, or you’re simply struggling to monitor too many schemes.

Consolidating your pensions with a single provider, offering a wider range of investment options and a single management fee, could make all the difference between a wet weekend in Hastings or a twice-yearly holiday to the Caribbean when you retire.

But, as mentioned earlier, consolidating your pensions isn’t always the right thing to do, which is why you should seek professional advice before taking action. Sometimes it’s best to leave your pension pot exactly where it is.

Workplace pensions often come with added benefits you’d lose if you were to switch. These could be a guaranteed annuity rate, enhanced cash-free sums, ‘protected pension age’ schemes that allow you to retire earlier than 55, or built-in life insurance or critical illness.

A final salary pension scheme (also known as ‘defined benefit’) is the nirvana of pension schemes. Nowadays, they’re incredibly rare – and the vast majority are in the process of being wound up because they are too expensive to run.

But if you’re lucky enough to have one, it usually makes sense for you to remain in the scheme rather than moving your money out. They offer you an inflation-protected guaranteed income for life – so any pay-outs rise each year in line with the cost of living.

Some pension schemes charge high exit fees to move your money out of the fund. While this could be worth it if you are young and have time to recoup the cost, it may not be worthwhile if your pension scheme only has a few years to run.

As well as these considerations, it’s also worth bearing in mind that some pension schemes won’t allow other funds to be combined with them. For example, you may have a pension from a former workplace that has competitive charges, a wide choice of funds and good performance – but which won’t accept transfers into it. In such circumstances, it may be the right option to leave things as they are.

Before you go it alone and make decisions about the consolidation of your pensions, you should seek the advice of a financial planner. Alongside the benefits and risks outlined above, it’s important to remember that the value of pensions and any other investments, and any income you take from them, can fall as well as rise, and you may get back less than you invested.

Your financial planner will be able to help you locate your pensions, get in touch with the providers, consolidate your holdings if appropriate, and navigate any potential pitfalls to make sure you’re making the right decisions. Most importantly, they will help you understand where you are now and what steps you need to take to achieve your retirement dreams.

You never know, you might even find you can retire today!