Mar 12 2021 13 mins
In this episode I look to answer a question that I get asked a lot in my financial planning business. Should I consolidate my pension?
The days of someone working for the same employer their whole life has pretty much disappeared, its more like you will move around during your career and have multiple jobs. Its not uncommon for someone to accumulate lots of different workplace pensions over the years and I have seen more and more people with 6 or 7!
This can lead to an admin headache and loosing touch with the pension providers or reams of paperwork coming through your door when the statement arrives. Worse still it could be that these forgotten pensions are left in poor performing and expensive investments.
Consolidating them into one pot could be a good idea and help reduces the charges in your scheme and maybe give you access to a wider investment options, particularly when it comes to ethical investing options.
However, there are things to look out for when moving pensions. Some older pensions may apply exit penalties when you move them.
If you are lucky enough to have a final salary pension, this is often best left where it is.
Older personal pensions may also have additional benefits that you will lose when transferring, for example a tax free cash amount that is higher than the standard 25%. it could provide a valuable Guaranteed Annuity Rate that provides you with a higher income than would be available on the open market.
Hopefully this information gives you some areas that you could consider when thinking about consolidating your pension schemes but as always this is information purposes only and everyones situation is personal to them. I would recommend that you seek financial advice when considering this.
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