Dealing with your old pensions
Consolidation may not be right for you, this will depend on many factors such as, the type of pensions you have, do they have any special guarantees, how well they are being managed, flexibility now and when you retire.
Benefits of combining your pensions.
Most of your individual pensions will have an Annual Management Charge (AMC) and this charge is for that pension company to look after the day to day running of your pension. The (AMC) a company charges you is worked out as a percentage of the money you have invested with them. The (AMC) can be very different across pension providers, for instance, one company could be charging 1% or more (AMC) while another could be 0.5% or lower. So, if you had a pension pot of £100,00 and the (AMC) was 1%, you would pay £1,000 a year in charges.
Generally, the more money you have invested with a pension company the lower (AMC) they will give you to encourage you to keep your money with them. Example, you may have four different pensions all with £25,000 in each pot, each pension has an (AMC) of between 0.5% and 1% being charged per year. If it was advised to combine all your pension into one, all your money with one provider, they very well may offer you a lower (AMC) as they have a bigger pot of money to manage, saving you money on charges therefore having more to invest for your retirement.
In addition to saving money on charges there are other benefits.
Keeping things simple, less paperwork to keep track of, quick investment changes, only one valuation for your entire pot, if you use applications (app) you only need one login, track total performance easily.
Flexibility, pensions keep on evolving and modern up to date pensions can offer the flexibility that older pensions cant, like drawing down money when you need it in retirement.
Plan for your future, as pensions change in value over time if all your pension provision is in one place, it can be quite accurate to make up to date predictions with one pension rather than having to request that information from several different sources, taking much more time.
How do I know consolidation is right for me..?
You only have one retirement so you don’t want to make any mistakes which would jeopardise your retirement plans. We are a company of Independent Financial Advisers (IFAs) and will evaluate all your existing pensions, evaluate each one separately and together, then search the entire pension market and compare what you currently have with what you could have, to see whether there are benefits in making some changes.
Warning: Pensions are very attractive targets to fraudsters so always take your time, think twice and check any firms/advisers’ credentials on the Financial Conduct Authority (FCA) website.
This article is for general information only and does not constitute advice.
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.