Transfer, consolidate and combine your pension pots?

If you have multiple pensions, it may be appropriate to consider combining your defined contribution pension pots.

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Transfer, consolidate and combine your pension pots?

Keeping track of multiple pensions can take time and cause you to lose out on valuable investments for retirement. Don’t let your hard earned cash become part of the estimated £9.7 billion of unclaimed UK defined contribution pension funds

Over time it can be easy to lose touch with pension savings providers as we change jobs, move home and the companies we have worked for change ownership or close down.

This means that even if you have not had many jobs, you could still have a number of different pensions to keep track of. The advantage of combining your pensions is that it can simplify your finances and make it easier to keep track of your retirement savings.

Remember though, not all pensions are created equal. Not all pension types can or should be transferred. It’s important to obtain professional advice so that you can understand and compare the features and benefits of the plan(s) you are thinking of transferring.

Not sure if combining pension pots is right for you?

We’ve outlined some pointers below, but if you’re still unsure about the best approach for you, please don’t hesitate to get in touch with us or arrange a free consultation. We look forward to hearing from you!

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What is pension consolidation and is it right for me?

Pension consolidation is the process of combining multiple pension pots into one single pot. This can be done with a pension transfer or by opening a new pension and transferring your other pensions into it. 

Why you might want to consolidate your pensions

There are several benefits to combining all of your pensions in one place”

  • Simplify your finances: If you have multiple pension pots, it may be difficult to keep track of them all. Consolidating your pensions into one pot could make it easier to manage your retirement savings.

  • Save on fees: If you have multiple pensions with different providers, you may be paying multiple annual fees. Consolidating your pensions may help you save money on fees.

  • Get better investment options: Some pension providers offer a limited number of investment options. By consolidating your pensions it could give you access to a wider range of investments.

Reasons why you may not want to consolidate your pensions

Consolidating or transferring your pensions into a single pot can make life easier but you need to look at each of your different schemes closely in order to make the right decision for you.  Here are some of the key things that you need to look out for:

  • Loss of valuable benefits: One key disadvantage is that you may lose out on valuable benefits that are specific to certain pension schemes. For example, some schemes may offer better death benefits than others, so consolidating your pensions into one pot could mean giving up this valuable protection. 
  • Paying higher fees: Another potential downside is that some schemes may have higher charges than you are actually currently paying, which means you would end up paying higher fees. This is something that needs to be carefully considered before making any decisions.
  • More difficult to access: It’s important to remember that once you consolidate your pensions, it may be more difficult to access them early if you need the money for an emergency. 

Need some more help tracing your old pensions?

Changed job? Moved house? It’s not always easy to keep track of a pension, especially if you’ve been in more than one scheme or have changed employers throughout your career. Over time, pension schemes close, merge or become renamed.  So even if you remember the name of your scheme, it could now be called something else.  If you need some help locating your old pensions and the key questions to ask when you find them read our quick guide here

Need some more help making decisions about consolidating your pensions?

Consolidating your pensions means fewer statements to keep an eye on, along with fewer and potentially lower management charges. However, It’s important that you know and compare the features and benefits of the plan(s) you are thinking of transferring.

It can be a complex decision to work out whether you would be better or worse off! combining your pensions, so it’s essential to obtain professional financial advice.

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