Many people have a few different pension pots from previous employers, and you may have heard of pension consolidation: putting all your pension plans together in one, single pension fund. For your retirement planning, it’s essential to have an idea of how much income you could expect to receive from your final pension.
Consolidation for easy management
Pension consolidation could make this much easier: no-one wants to spend hours trawling through filing cabinets or peering at different websites trying to work out what all your pension funds add up to. It can also reduce the chances of losing track of any old workplace pension pots you may forget about as they are lower in value. When it comes to your retirement fund, every penny counts.
Whilst it’s clear that moving multiple pensions into one place makes it easier to keep track of your investments, it can also, potentially, help you to save money. You could potentially earn thousands of pounds if your transfer your pensions into a plan with a higher growth rate or by moving out of plans that have high fees if it’s suitable for you. You can use our pension calculator to get an idea of how this applies to you, and how much you can save.
Consolidation for performance
Some of your pensions may be under-performing – a pension plan you invested in 20 years ago might have been the best choice at the time, but might not be performing as well as other options today. Consolidation of pension funds into a better-performing and more suitable personal pension plan could be a potential first step, and the earlier you do this, the better.
Your priorities might also have changed over the years, or you may wish to take advantage of the new options that have become available. Pension drawdown – when you make withdrawals from your pension pot as and when you need it – is a popular option, but different providers have different rules. You might also have changed your views on the level of risk you are comfortable with in your investment, and this may have a big impact on what plan is right for you. Therefore, combining your pensions could make sense: moving all your funds into the pension scheme that gives you the options you want.
Get advice on pension consolidation
Consolidation of pension funds has many benefits, but it is essential to have a good financial adviser to talk you through the process. For some people, it might be better to stick with your existing pension plans. This is particularly the case if any of them have additional benefits, such as loyalty bonuses or life cover, offer you a guaranteed income for life like a final salary pension, or have early termination penalties.
A Financial Conduct Authority regulated financial adviser should always act in your best interests and will look for an option that is right for you.
Pension consolidation advice is one of our team’s top priorities here at Pension Works. We will assess the investment options of each of your private pensions and advise you on what course of action to take next.