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Bringing pensions together

pension advisor at home

Why you should consider combining your pensions

Employment has changed significantly over the past few decades with many of us switching careers multiple times before we retire. The idea of a ‘job for life’ is now a thing of the past. In fact, research shows [1] the average person changes jobs 12 times in their lifetime.

This can make it harder to keep in touch with all the different pension providers we have over the years, resulting in many of us missing out on money we’re owed. There is an estimated £9.7 billion of unclaimed defined contribution pension funds in the UK. [2].

What to do if you have multiple pension pots

Even if you can stay on top of what you have saved and where, managing several different pension pots can be challenging. If you’re one of the millions of people with multiple pensions it is sensible to consider consolidating them into one pot that is easier to track.

Number of different pensions

If appropriate for your circumstances, pension consolidation is a great way to simplify one area of your finances. It can make it easier to plan for your retirement and to manage your money once you have retired.

But be aware that not all types of pensions can or should be transferred. It’s important to seek professional advice so you have a full picture of your individual situation and can compare the features and benefits of the plan(s) you are thinking of transferring.

What is pension consolidation?

Pension consolidation is the process of combining multiple pension pots into one single pot. It can be done via a pension transfer or by opening a new pension and transferring your other pensions into it. You may do this to make it easier to keep track of your retirement savings, or to try to get a better rate of return on your investment.

But there are a few things to consider before consolidating your pensions. Make sure you are aware of any exit fees that may be charged, and whether you will lose valuable benefits such as guaranteed annuity rates.

Reasons to consolidate your pensions

  1. Simplify your finances: If you have multiple pension pots, it can be difficult to keep track of them all. Consolidating your pensions into one pot could make it easier to manage your retirement savings.
  2. 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.
  3. Get better investment options: Some pension providers offer a limited number of investment options. By consolidating your pensions, you may gain access to a wider range of investments.

Reasons not to consolidate your pensions

  1. Loss of valuable benefits: You may lose out on valuable benefits specific to certain pension schemes. For example, some schemes offer better death benefits than others, so consolidating your pensions into one pot could mean giving up this valuable protection.
  2. Paying higher fees: Another potential downside is that you could end up paying higher fees than you are currently depending on what route you decide to take. This is something that needs to be carefully considered.

How to track down your pension funds

You can use the government’s Pension Tracing Service at https://www.gov.uk/find-pension-contact-details to locate money you previously saved for retirement that is currently unclaimed.

Be aware that pension savings are major targets for fraudsters. If someone contacts you unexpectedly offering to help you transfer your pot, it’s likely to be a scam. If you’re concerned, contact the Financial Conduct Authority (FCA) to check they’re legitimate.

Need professional advice to help make your decision?

Before you look to bring your pensions together, it’s essential to obtain professional advice. Call today for more information about how we can assist you through this complex process.

 

Source data:

[1] https://www.zippia.com/advice/average-number-jobs-in-lifetime/

[2] https://www.pensionspolicyinstitute.org.uk/media/2855/201810-bn110-lost-pensions-final.pdf

CAVEAT:

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE). 

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. 

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Adam Reeves

Author: Adam Reeves

DipPFS Cert CII (MP&ER)
Independent Financial Planner, Wealth Manager, Director

Last updated on

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Adam was quick to assess & understand my situation, and was able to discuss & communicate in a very concise and simple way the various options available to me, taking time for me to understand and clarify where necessary. My understanding & knowledge of taxation & pensions has increased significantly allowing me to feel much happier making financial decisions for the future.

Rob – West Sussex

Adam and his team undertook in-depth research into our existing QROPS schemes and clearly set out both pros and cons of transferring the funds back to the UK. Having decided to go ahead with the transfer, Adam and his team worked extremely hard to facilitate the transfer. The QROPS pension trustees were not always the most professional or responsive organisation – however we were very grateful for the perseverance and commitment that Adam showed us as clients.

Jonathan – East Sussex

Adam offered a range of financial products , the one he suggested was affordable and proved to be a good choice.  Returns on investments have exceeded my expectations, based on Adam’s advice and guidance. Profits have enabled house improvements to take place.

David - Surrey

Adam arranged an appointment very timely, he explained his role and qualifications as an IFA giving me reassurance , we went through my retirement and investment goals. Adam discussed my options explaining in great detail, I felt relaxed during our discussions allowing me to fully understand my choices. I feel very confident in the financial advice allowing me to enjoy my retirement.

I was very happy with Adam’s recommendations and explanations of financial products which would suit my retirement goals, I feel this has helped me review and reduce my financial risk as I reach retirement, leaving me feeling confident that I can enjoy my retirement plans.

Ron – West Sussex

After initial meeting Adam put together a very detailed and thorough written plan. At our second meeting he went through the whole booklet and explained everything in layman’s terms which made it a lot easier to understand.

I am very happy with everything that was suggested and put in place especially with something as big and important as pensions. Adam and his team have taken a huge weight off my shoulders and I would highly recommend their services to anyone needing help with their financial planning and pension.  Adam couldn’t have been more helpful, and even came outside his normal area to meet me on a number of occasions.

Richard - Kent

Unfortunately I had to claim on my critical illness insurance due to my wife being ill and because of the sound advice Adam gave in acquiring this insurance we ended up being financially safe through a tough time.

Steve - Kent

Adam did a review of our financial situation, confirmed that Flexible Drawdown best suited our needs as a family, and then did all the research into the best product for us. He will continue to monitor it for me. He acted extremely promptly because we had a deadline for requiring the lump sum; went out of his way arranging meetings during non-office hours, was professional yet friendly and explained a difficult subject very well.

Clare – East Sussex

Adam did a thorough review of my pension policies, clearly explained how well they had performed, how flexible they were, how the market regulation has changed, and, crucially, what the tax implications would be if I were to leave them untouched. He accurately assessed my attitude to risk and recommended an up-to-date solution that will offer me the greatest flexibility at retirement.

Greg – East Sussex
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