Should I consolidate my pensions?

Lauren Morton | 09/10/2018



If you’ve worked for several different employers over the years, the chances are you might have more than one company pension to keep track of. In fact, on average people have 11 jobs in their lifetime*.

Many of us will have joined a workplace pension with every employer we’ve worked for, and thanks to auto-enrolment, introduced in 2012, employees are now automatically signed up to their employer’s pension scheme unless they’re on a low salary or choose to opt out.

If you have paid into several different pensions over the years, it can be difficult to keep track of all your savings, especially when pensions are often at the bottom of the list.

According to separate research from the financial regulator, the Financial Conduct Authority, £250bn of pension pots in the UK could benefit from consolidation**.

Often, we lose touch with our pension providers when we move home, with research by wealth management group Tilney revealing that 13% of those who’ve moved to a new property have never told their pension providers of their change of address, whilst a further 12% admit they’re unsure whether they told their providers or not***.

Benefits of consolidating your pensions

There are several reasons why moving your pensions into just one personalised plan can be a good idea.

1. They’ll be easier to manage

Having all your pensions in one place can make it much simpler to manage your retirement savings, and to monitor where your retirement savings are invested. You may also be able to choose a plan which offers you a much wider range of investment options than your current pensions do. It can make it easier to understand your pension too, and with your dedicated pension expert on hand, Profile Pensions will make sure any questions you have are answered. According to a report from the International Longevity Centre, the average UK consumer who takes financial advice will increase their wealth by £30,991****.

It should make things more straightforward when it comes to taking your pension benefits as well, because you’ll just have the one pot from which to take either a regular income, smaller lumps sums, or a guaranteed income from an annuity. You can, of course, choose a combination of these options if you want.

2. You’ll have less paperwork

Moving your pensions into one plan can reduce the amount of paperwork you have to deal with. For a start you’ll only receive one pension statement a year rather than several, so it’ll be easier to stay on top of your savings. If you consolidate your pensions with Profile Pensions, you’ll be able to log into a secure online account whenever you want to check your pension, or to access your dedicated pension expert if you need any help or support. We’ve combined over £450m of retirement savings for our customers, so you’ll have peace of mind your pensions are in good hands.

3. There will only be one set of fees and charges

You may be able to reduce the charges you pay on your pension too by transferring everything into one plan. Keeping your pension charges low can save you a significant amount of money every year, as any fees will eat into your investment performance.

Things to be aware of when consolidating your pension

Before you consolidate your pensions, it’s important to work out the costs involved. Some pension schemes may, for example, charge you an exit penalty if you move your money elsewhere. If there is one, you’ll need to weigh up whether this is worth paying for the benefits of consolidating. 

You should also check whether you’ll lose any benefits if you transfer out of your existing pensions. For example, if one of your current pensions offers you the ability to take more than 25% of your fund tax-free, you may decide you’re better off keeping it. If you belong to a final salary or any other pension offering safeguarded benefits, transferring might not be the most appropriate solution as you could lose out on a guaranteed level of pension in the future, and you must seek professional financial advice if you’re considering taking this route.

It’s really important to understand the options available to you before consolidating pensions but it is often worth doing, according to research from the financial regulator the Financial Conduct Authority, £250bn of pension pots in the UK could benefit from consolidation**.

If you aren’t sure if moving your pensions is the best thing for you it’s important to speak to an expert like Profile Pensions so you don’t lose out. Profile Pensions will give you a recommended pension plan which is in line with your personal circumstances and attitude to risk. This could make you better off in retirement and give you pension peace of mind.

*Government source, Lost Pensions

** Source: FCA | July 2019 | Effective competition in non-workplace

*** One in Five UK Adults Have Lost Track of a Pension Pot

*** International Longevity Centre, The Value of Financial Advice

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