Organise and optimise pensions

April 2025

Objective

Matt and Ellen wanted to get their pensions organised.

Between them, they’d accumulated 6 pensions across their employed careers with a total value over £150,000.

Being in their mid-30s, they were tired of keeping track of multiple pension pots, had no idea what they were invested in and wanted to get more clarity on what pensions mean for them going forward.

Further, they had a goal to stop work completely from age 60 and enjoy travelling the world in early retirement.

Recommendations

We analysed Matt and Ellen’s existing pensions as part of the 100 day plan and made the following recommendations based on their circumstances and objectives.

Move Ellen’s old pension into her current employer pension

Ellen’s existing employer pension had administration charges below 0.10% and a wide range of investment funds to choose from. It made sense to move her old pension plan into her current one to reduce charges (saving c.£300 a year).

Consolidate Matt’s pensions into a new personal pension

Using pension transfers of old pensions and a partial transfer of Matt’s existing employee pension fund, Matt was able to achieve lower charges, better service levels and access to an ideal investment portfolio in a personal pension.

Improving expected investment returns

The past performance of the current default investment funds was poor in some instances and didn’t meet Matt and Ellen’s risk profile.

For example, the past performance of Matt’s Aegon ‘Workplace default (ARC)' fund was 5.7%  a year in the 5 years to end 2024. The recommended investment funds had an annual performance of 7.8% (2.1% a year more).

This potentially cost Matt £5,200 in his pension over the past 5 years.

Past performance is not an indicator of future performance but there were fundamental issues with the fund’s asset allocation using an evidence based investment philosophy.

Increase Matt’s pension contributions by salary sacrifice

Matt’s employer allows salary sacrifice for pension contributions. He was currently contributing 5% of his salary which was matched by his employer (total 10%).

We recommended an increase to pension contributions of 10% salary* as this was affordable.

The contributions were based on a £175,000 salary and benefitted from 45% income tax saving (£7,875), plus 2% employee national insurance saving (£350).

As an added bonus, Matt’s employer contributes their employer national insurance saving on top of his contribution, adding £2,625 to the contribution.

By giving up an extra £773 net monthly income, Matt received £1,677 more into his pension every month, saving £8,225 in tax (54% tax relief).

Confidence for the future

Using financial projections and certain assumptions around the future, Matt and Ellen were currently on track to afford to stop work at age 66.

With the changes recommended and increases to regular investments, their goal for financial freedom from age 60 looks possible.

Using annual meetings and regular check ins to adapt to changing circumstances and objectives, Matt and Ellen will continue to build steadily for financial freedom while enjoying life today.

Summary

Matt and Ellen had no idea of what to do with their pensions and wanted a clear plan for their future.

MUVADO’s 100 day plan put them on track by analysing their current position and improving their position. As MUVADO members they have an accountability partner to adapt to changing circumstances.

If you want help getting your finances on track, book a call to get started.

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Risk warnings

Please note, a pension is a long-term investment not normally accessible until 55 (57 from April 2028). Lower salary may impact the amount you can borrow, such as mortgages. Past performance is not an indicator for future performance.

Investments carry risks. the value of your investment (and any income from them) can go down as well as up and you may not get back the full amount you invested.

Tax planning is not regulated by the Financial Conduct Authority.