Oct 06, 2020
Should I Consolidate my Pensions?
Over the years you have probably collected a number of pensions as you have changed jobs.
A question I get all the time is ‘should I consolidate my pensions together, or leave them where they are’?
It’s a great question and there can some clear advantages to this. However it needs investigating to understand what is the best way forward and to ensure you don’t lose out on potentially key benefits from moving away from one of your pensions.
What Are The Factors
What are the costs of your pensions? Are you paying over the odds for what you are getting and could you get better benefits from a lower cost pension.
How is your pension performing? Is it dragging its heals and could you increase the values of your pensions elsewhere.
What risks are you taking? Is the risk of your pensions inline with your attitude to risk and should they be changed.
Is there enhanced tax free lump sums? Some pensions provide a higher level of tax free cash above the normal 25%. This needs calculating to ensure you don’t lose out on a tax efficient benefit.
Is there guaranteed income? Does your pension provide guarantees at retirement with the income that you could lose out on by moving the pension.
Would consolidating them improve the terms by having a bigger pot (economies of scale)?
How We Review It
The first thing we do is gather the relevant information from each of the existing pension providers about your pensions so that we can see exactly what is going on under the bonnet of them.
Once we have that information we are considering if you should:
- Keep them where they are
- Consolidate them all into one of the existing pensions
- Consolidate them all into a new pension under the open market
We also consider your objectives. Are you:
- A number of years from retirement, so looking for growth.
- Nearing retirement, so looking at securing for retirement.
- Wanting to take a lump sum from your pensions, but not retire.
- Retiring, so looking at taking income from your pensions.
By weighing up these considerations and facts we are able to secure the right retirement plan for you to meet your objectives.