Consolidating my pensions online
The benefits of consolidating pensions seemed obvious The paperwork was in good order, so I was able to weigh up what each one could offer me. But the whole process usually takes anything from two to six weeks.
Because the reality is how your funds perform and paying a reasonable charge for them can make a big difference. Charges also tend to reduce the bigger your pension pot becomes. Your existing pension provider may charge exit penalties if you leave them.
The value of your investments can go down as well as up and you may get back less than you originally invested. You are more likely to take an interest in your pension if you see it as one larger amount of money rather than a collection of smaller pots.
As hybrid pensions contain some element of final salary benefit, the same general rule of thumb applies when considering whether or not to consolidate hybrid pension schemes. Some pension providers might charge a higher fee than others. Past performance is not a guide to future performance and some investments need to be held for the long term. There are a number of factors to decide this, but one of them could be how generous the transfer offer is.
Cons of putting all your pensions together Although consolidating multiple pensions together makes life simpler, there is a risk that you could lose some of your pension benefits if you move them. This is where professional financial advice will really add value. Your pension scheme s may charge you for transferring your pots. If your sole aim is to rationalise your pension savings, it might not be worth consolidating your final salary pension into a defined contribution pension. My colleague Alistair Hardie previously gave some useful tips that could help with pension planning if you are planning to consolidate.
Transferring to a single pension allows you to cast off these shackles and take control. With certain pension plans, the costs of a pension merger may outweigh any benefits.
With the complexity that comes with reviewing existing pension arrangements it is so important to get professional advice to ensure you are making informed decisions about your financial future. Charges and performance make a difference I have a better understanding of my charges and the value I get from these. They then receive both elements at retirement. As with any investment, the value of a pension can go up or down and may be worth less than what was paid in.
Most people have several jobs throughout their lives and multiple career moves mean many of us end up with numerous pensions along the way. Not only will they be easier to manage if they are held with just the one provider, but you may also have access to a wider choice of investments, depending on which kind of plan you choose. The guaranteed annuity rate could be lost if you combine pots. Tax treatment depends on your individual circumstances and rules may change. It will also be easier for you to manage if payments are from a single source.
You can control your pension more easily. Merging workplace pensions from previous employers There are only so many pension providers on the market. It will also be easier for you to keep track of a single, larger annuity payment, rather than several smaller ones, each time you receive them. You can also use all, or part, of your fund to purchase an annuity.
In fact, any accepting pension provider may insist you get prior independent financial advice. But it can make it trickier to keep on top of your finances when it comes to your pension. And if the smaller fund has better terms than the larger one, you may actually be better off shifting your cash from the larger pot to the smaller one. That should make it easier to assess whether an exit fee will adversely affect your decision to consolidate your pensions.
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