With the help of Slater Financial I can relax safe in the knowledge that my savings are working hard for me.

Julie Carter

Pensions Consolidation

October 10, 2017

It is fairly common for people carving out their career progressions to change jobs, which can mean ending up with multiple pensions. You might also have set up a personal plan, adding to the total. Pensions consolidation is, simply put, the bringing together of all those individual schemes into one place.

As time passes, it can be increasingly difficult to keep track of how each pensions is performing and so consolidation can be an attractively convenient choice. Like all things in life though, it comes with positives and negatives. With no ‘one size fits all’ policy, it’s helpful to understand what the pros and cons are in relation to you own personal circumstances. The type of pensions that you already have, and when you plan to retire are just two examples of these variable factors.

Sort out your pensions might seem like a daunting task at first, but getting the best performance out of your money now, can make all the difference later on. The key to any investment is to look for opportunities offering the highest return to you, at the lowest charges.

Cost structure varies across different pensions. Whilst different plans might offer the same annual investment growth, if one charges more than the other, it can have a significant impact on the amount of money you can expect to have access to once you do retire. The charges can be affected by things like the type of pensions scheme you are enrolled in, and how much you are contributing to that particular pot.

Consolidating your pensions can help you see exactly what will be available when the time comes. Rather than have individual statements arriving at different times for multiple schemes, everything is laid out in one place. If you are setting particular goals to fund the lifestyle you have in mind, this can help structure your saving plan, and avoid any surprises.

Sorting out the paperwork to move your pensions can put some people off, and it is worth considering that providers will make staying with them the best option. If there are very high exit charges for moving your pensions out of a scheme, it may be more cost effective to stay put.

It is not all about comparing percentage rates, though. Some pensions have additional features worth taking into account when making a comparison, such as the presence of an additional bonus built in on top of the annual growth. An alternative provider might offer a higher percentage return each year, but without the added bonus to go with it, the final sum might not be as impressive.

Other features might include performance guarantees, or life assurance, both of which carry their own considerations. For example, the cost implications of then having to buy life insurance independently of your pensions. Pensions schemes are also subject to different tax rules depending on the sort of pensions that it is. Moving your funds to appreciate under a different set of rules requires careful consideration of what you are hoping to achieve.

The most important thing is to ensure that you understand what your current portfolio can do for you, in comparison to what else might be available.