Should I consolidate my pensions?

Should I consolidate my pensions?
consolidate your pensions

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people.

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

Many people will change jobs during their working lives and as such may hold a number of pensions with different employers – they might also have a personal pension or SIPP.

Consolidating all of your pensions into one pot could help reduce fees and charges. It can also make it easier to keep track of your fund ready for when the time comes to retire. Of course, people’s circumstances are different. Your decision will come down to what type of pension you have and how long you have until retirement.

What are the benefits?

There are many benefits to consolidating your pensions – especially if you have a number of pots with different providers. One of the main benefits is that you’ll only ever need to keep track of one pension. This means you won’t have to manage larger amounts of paperwork across the different providers. By consolidating them all into one you will be able to more easily see how much you will likely receive when it comes to retirement.

Finding a better deal

Another reason people will consolidate their pensions is to get a better deal. There are many factors to take into account, of course, such as your future lifestyle and attitude to risk. Considering a new investment should not be taken lightly and seeking professional advice is key to getting the right deal for you.

When should I consolidate my pensions?

If you are considering an annuity to provide your retirement income you may get a better rate from a provider if you have a larger pot rather than a number of smaller ones. It will also be easier to keep track of one larger income payment rather than a number of smaller ones.

If you are looking to use income drawdown to provide your retirement income it is likely to be more cost effective to take it from a larger pot and easier to manage with one provider. Some providers also have a minimum fund size for income drawdown and combining pots may be the only way to access this retirement income option.

Pensions can, of course, be combined prior to retirement to possibly reduce overall charges, improve investment performance or make management easier.

This will often depend on how long you have left before retirement age. You may decide that your current investments are performing well enough, so the best course of action is to leave them where they are.

However, if they are under-performing then it could be a good idea to review your current pensions. An experienced adviser would be able to outline the options available to you, with a view to consolidating them all into one pot if need be.

What to do next

Here at Pensionlite our team of experienced advisers will be able to provide no obligation advice. This will help make those tough financial decisions a little easier to understand. Our advice and recommendations will be sent to you in writing and we will make sure to detail all of the costs involved if you follow our advice and we implement the recommendations for you.