Reasons To Consolidate Your Pensions

If you’ve worked for more than one employer, you will doubtless have more than one pension plan. How long is it since you last looked at them? Are they languishing in poor performing funds?

Combining some or all of your pensions into a single plan could save you money, achieve better growth and make your life easier. Here are some things to consider:

5 benefits of pension consolidation:

1. Consolidating could save you money. Each pension plan has its own annual charges so combining multiple pensions into one means you’ll only pay one annual fee. Shopping around could also help you find a plan with lower charges than your current ones.

2. It gives you greater flexibility. Modern pensions may offer benefits that older ones don’t, like flexible drawdown of your pot or income for your loved ones after you pass away.

3. It keeps things simple. You only have to remember one set of login credentials and, if your address changes or you want to change the recipient of any death benefits, you only have to tell one provider.

4. You could get better opportunities. Bringing your pensions together could increase the overall value of your savings and a different plan or provider might give you access to a wider range of investment funds.

5. It makes it easier to plan for the future. An important part of retirement planning is understanding what you’ve got and what you’ll need. Having everything in one place makes it easier to track your plan’s value against your goals.

Things to be aware of

You could be charged exit fees. Some plans still have exit penalties so make sure you’re aware of these and the impact they might have on your pot.

It may be better to stay in a final salary (also known as defined benefit) scheme. These offer a guaranteed income in retirement alongside other benefits (like a pension for your spouse when you die) which you’ll lose if you transfer out.

There’s no guarantee you’ll be better off consolidating. Your current pensions may have benefits like early access or guaranteed annuity rates that might be worth keeping, and annual fees on other pensions may not be competitive.

Get advice before you consolidate

We’re here to help. We can assess your situation, explore your options, and help you understand if pension consolidation is right for you.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

Approved by The Openwork Partnership on 26/09/2024