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Pension Consolidation

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Should I move my old pensions?

If you’ve accumulated numerous workplace pensions over the years from different employers, it can be difficult to keep track of how they are performing. It’s not uncommon for people to have 6 or 7 different pensions from different providers.

There is a danger that forgotten plans will end up in poorly performing funds, and the paperwork alone can be enough to put you off becoming more proactive.

A pension switch could see you moving your money to a new home with a new provider. The main reasons to switch will be to reduce the charges on your plan, particularly if you have older plans with high fees, or to access different investment options.

The other main strategy is to consolidate all your retirement savings in one place for ease of access. So is transferring everything into one easy to manage pension the way to go?

Should I consolidate my pensions if I change job?

Making the most of your pensions now could have a significant impact on your happiness in later years; getting it right could mean a higher income and a comfortable retirement, or even an earlier date when you can work less or even stop working.

If you’re lucky enough to be in a final salary scheme, it will almost certainly always make sense for the money to stary where it is. Even if you are no longer paying into the scheme.

If you have a defined contribution pension where success or failure depends on the performance of your investments consolidation is worth considering.

The impact of high charges on your pension schemes

The negative effect of high charges and poor fund performance should not be underestimated. Charges and fund performance should guide your decision on where to leave your pension savings.

If a 35-year old with a £10,000 pension pot invests until 65 in a fund that achieves 5% annual growth but charges 2% in fees a year the pot will be worth £23,720.

The same £10,000 invested in a fund that achieves 7% annual investment growth with a 1.5% annual charge, will be worth £48,451 – more than double. A better return will never be guaranteed but more investment choice and lower fees will give you the best change of achieving one.

What are the pros of consolidating your pensions?

Deciding if you should combine all of your pension pots isn’t a straightforward decision and there are clear advantages and disadvantages.

Keeping track of and managing your pension savings will be easier

You may have access to a greater choice of investments

The potential to pay less in charges if you have a new plan with competitive fees

A well managed fund is more likely to offer better long term returns

Old style pensions can be inflexible and a new plan may offer more flexibility in how you can take your money in retirement.

What are the cons of consolidating your pensions?

It is important to weigh up any potential cons when you are looking to consolidate your pension plans.

Some schemes may have exit penalties so switching your money out will deplete the size of your pot

Older pots may have some attractive features that you will lose if you switch to a new plan. For example you could lose early access or the potential to take more than 25% tax-free cash or guaranteed annuity rates

Switching may not guarantee cheaper costs

Secure Your Financial Future With Expert Guidance

Are you looking for a trusted financial advisor? PAB Wealth is here to help you achieve your financial goals. We will guide you through the pension consolidation process. Our expert advisors provide personalised solutions based on your needs.

Comprehensive Financial Planning

At PAB Wealth we provide comprehensive financial planning, working closely with you to understand your financial goals and create a customised plan that aligns with your needs. Our approach ensures that your financial plan is not only strong but also adaptable to changes in your life and financial situation. We offer expert guidance every step of the way. With PAB Wealth, you can be confident that your financial future is in capable hands.

We provide ongoing monitoring and regular reviews of your investment portfolio to adapt to market changes and seize new opportunities. Our team of experienced advisors works diligently to keep your investments aligned with your long-term financial objectives. Trust PAB Wealth to manage your investments with expertise and precision, so you can achieve financial peace of mind.