Should I amalgamate all my pensions?

Are you considering putting all your pensions into one pot? We are often asked if this is a good idea, and the answer to that is that it rather depends.

Let’s explore that in more detail…

What kind of pensions do you have?

So, if you have any legacy final salary pension schemes, you need to leave those sitting where they are. Equally, if you have any pension plans that have additional benefits like life cover, you need to reflect on the cost of replacing the life cover or other benefits before moving your plan.

Assuming neither of the above conditions apply, we recommend you looking at your existing plans in depth.

Some old pension schemes, such as those taken when contracting out of SERPS, come with quite hefty admin fees. If no additional monies were paid in the value can be quite small, and the cost of the penalty fees to transfer them to a new provider, can make them worth very little, if anything.

You may have one or more auto-enrolment schemes, and you will need to check out how those are performing and who the scheme is with, before deciding to move these.

Most group pension schemes – in other words pensions provided by employers – tend to take the “do it yourself” approach.

By that, we mean that the pension will be invested in a particular fund or group of funds. Most of these are usually pretty low risk, and whilst that means you are less likely to lose money, it also means they don’t deliver particularly good returns. If you want your money to perform better, then it is up to you to study the markets and choose to move into different funds.

Most employers take a cautious investment approach when taking out company pension schemes, which is perfectly understandable. Most employees do nothing with their pension once they have it, so it just “trundles” along until retirement age, or you decide to look at your pension pots as a whole.

More active employers support their staff by providing access to financial advisers.

Employees get the chance to sit down and discuss their individual attitude to risk, and their pension is managed according to their own needs. This is a role we deliver for several companies, as well as helping staff with a wider range of financial decisions.

When you are around five years away from when you plan to retire, we also recommend clients sit down and look at their defined benefits with all their financial products. For pensions this may be an opportune time to amalgamate some pensions, or indeed you may discover you can access some funds earlier than you thought.

You may also take the decision that you are not ready to retire at the age you had previously planned, in which case you will need a plan for your continuing financial portfolio.

Needless to say, from an administrative perspective, having all your pensions in one pot makes life easier. But we don’t believe that should be a primary reason for choosing to move pensions.

You need to be confident of your pensions performance, your ability to manage funds yourself, and your access to independent advice to support your life goals.

Above all, it’s important that you seek the advice of a financial adviser on your current set up, before making any decisions. We would be delighted to support you, so please contact us on 01344 875310 if you would like to arrange a chat.

should I amalgamate all my pensions