When should I consolidate my pensions?
Nine situations that suggest it's time to consolidate your pensions
You should combine your pensions if…
1. You’ve had jobs and taken out pensions with several employers
The days when you have a job for life are long gone. By the time most of us hit middle age we have amounted not one but many pension pots.
Like everything in life pensions change: the mix of assets you hold may well not match your risk profile now, companies and funds may have merged or been taken over and you probably are finding it hard to keep on top of it all.
Having everything under one roof could make your pension easier to monitor and manage, with less paperwork and more chance of noticing if your investments are performing badly or if you’re paying too much in charges.
2. You’re in danger of forgetting where some of your pensions are
On the face of it, it seems highly unlikely that you could ever forget about thousands of pounds of your own money. Yet reports consistently reveal that there are billions of pounds sitting around in unclaimed pension plans. One (or more) of these pensions could well be yours.
Moving a number of pension pots into one place makes it much less likely for you to lose track of your pension savings. In addition, it makes things so much easier, with annual statements only coming from one source and not multiple companies throughout the year.
Speak to us about running a check to uncover any hidden pots of gold at the end of your pension rainbow.
3. You’d like more control over where your money is invested
Workplace pension savings often go straight into default funds chosen by the firm, which might not match your investment objectives or your appetite for risk.
Choosing your own scheme makes it more transparent about where your fund is being invested, and gives you more control over where your money goes.
We work with you to map out your goals for retirement and help you build your own investment mix to match your aspirations and suit the level of risk that you are comfortable with.
4. You’re moving to a new job (again)
Joining a new employer – and potentially yet another pension scheme – can be the prompt you need to focus on your retirement goals. Part of this process will be to consider combining your pension pots – but the outcome of your decision is far from a foregone conclusion.
You may, for example, anticipate more career moves in the future. Or you may hold final salary (or defined benefit) schemes which are typically more generous and offer valuable guarantees that might be lost if you transfer.
Do not worry. As soon as your initial, ‘no obligation’ meeting with us is over we’ll help you find out exactly what you have now, help you define your plans for retirement and show you a long-term financial plan that can achieve your retirement goals.
5. You’re 55 years old (or getting there)
Forget 3: 55 is a magic number.
Beyond this you have much greater freedom as to how you can access your pension savings. The extent to which you want to take advantage of that freedom will influence how you decide to consolidate your pension plans.
For instance, you’ll certainly want to take a very close look at how flexible the pension you’re thinking of consolidating into actually is when it comes to taking your money out.
We only use pension schemes that give you maximum flexibility – so you can rest assured that your plan can adapt as and when your situation changes.
6. You’re approaching retirement
It’s no surprise that as you approach retirement your pension investments begin to merit much closer scrutiny than you have offered them before.
Consolidating at this point can make sense if you want all the money in one place as you make your retirement plans.
As your investments are now likely to be worth a substantial amount of money, you might want to check the fees you’re paying too – as these might also have grown over the years.
Also, at this point you should watch out for any exit fees and other ‘hidden’ costs of consolidating. These are always an important consideration, especially when there may not be time to recoup any costs before you retire, even when you move to better performing plans.
7. You’re paying too much in administration fees
Multiple pension pots mean multiple fees. This often also means extra costs.
When charges for fund management, administration, tax wrappers and platforms are all included, they can add up quickly, and potentially take a big bite out of your pension pie.
You should pay close attention to the fee structure of the pension you’re consolidating into, as some may be better suited to your needs. To help you do this, we charge flat fees for a pension report and then offer a sliding scale of fees based on the portfolio value. This helps us to increase the value we can add when it comes to administering larger investment portfolios.
8. You would like more information on how your pensions are performing
Some pension companies are not very good in keeping in touch with you: it’s not unusual to have valuations sent separated by 12 months of silence in between. This makes it difficult to keep on top of your retirement planning.
It’s also entirely unnecessary. We live in a connected world and expect – in most other areas of life – to be able to access information easily and quickly. Consolidating your pensions into an online platform makes it possible to get a valuation at any time and always be up to date with the performance of your portfolio.
9. You know you need a long-term financial plan
Pensions are a very important part of financial planning, but there are other assets that you need to also factor in to your plan for retirement.
We use a tool called Lifetime Cash Flow that allows us to dynamically plan your financial future. It takes into account all your assets to plan the best way to fulfil your goals for retirement and your attitude to risk.
We can show you how to plan for financial freedom: a future without any fear that you will run out of money or miss out on your dreams.