It’s a fair question. Over the course of your career, you may work for a number of different firms all with contrasting pension schemes – each of which could be with different pension provider entirely. That means that you’re likely to build up a number of separate pension pots, making it harder to keep track of exactly how much you have saved where and how much you have overall. So, to the question ‘is it best to consolidate my pensions’, we’d recommend a resounding ‘yes!”.
How to consolidate pensions
Pension consolidation is the process of combining all or most of your pension funds into one singular place.
Arguably, the main advantage of consolidating pensions is to make them a lot easier to manage. If all of your pensions are in one place, you’ll be able to see if you are on track to meet your financial goals – whatever they may be.
Is it best to consolidate your pensions? If you’re looking for a clear projection of your retirement income and to identify any potential shortfalls that need to be addressed, then I would certainly recommend it. It can make it much less onerous when it comes to dealing with any paperwork too, as you’ve only got one pension pot to contend with rather than several all over the place.
Consolidating your pensions can save you money
Not only does consolidating your pensions save on time, it can also save on costs as well. If you have multiple pensions with various different providers, you’ll likely be paying administrative fees for the management of each individual pension pot. You always need to be aware of the overall cost of managing your pensions, as these fees will eat into your investment returns. By consolidating your pensions, often you’ll be much more cost-efficient and aware of what the costs actually are.
If you have multiple pensions all in different places, it can be tricky to monitor the performance of all of your investments across these platforms. Some pension providers may place you in funds that are not necessarily right for your current circumstances too. Consolidating your pensions onto a single platform can open up a significantly wider range of opportunities to make your money work harder.
The consolidation of pensions can also provide greater flexibility with how you can access your pension, once you reach retirement. Some pension schemes – in particular, older ones pre-2015 – may not allow you to access your pension in the way that you want to.
By consolidating your pensions into a more modern, flexible plan, you will gain greater control over how you take your benefits in retirement, and additionally, how your pension can be passed on to your beneficiaries.
Are there any downsides to consolidating my pension?
If your curious how to consolidate your pensions, the singular potential downside is that consolidating your pension fundsmay mean that any specific benefits that come with your fund could be lost if you transfer out from your current pension scheme. Also, some providers tend to charge exit fees to transfer your funds into another pot, so it’s always worth speaking with a professional financial adviser to see if consolidating your pensions is the right thing for your specific circumstances.
We can also help to advise which pension fund is the highest performing and is most suited to your needs, and then assist with any consolidation to make the process as stress-free and simple as possible for you, our client.
Get in touch today for a free consultation with one of our team.