Consolidating your pension is a way of combining all your pensions into a single pension pot so that it allows you to keep track of your pension savings more easily. Over the course of your career, it’s likely you’ll have worked for a number of different employees, so you may have built up a collection of pension pots from different providers.
There are many benefits to consolidating your pension to one single pension provider. These include:
Having all your money in one place
Consolidating into a single pension pot makes it easier to keep a track of your overall retirement savings. It’s easy to lose track of paperwork from different pension providers, particularly when you move house. Having all your pension money in one place with one provider will ease the administrative task of updating information and keeping track of your savings.
Helps monitor your savings against retirement goals
If you want to make the most of your retirement, reviewing your pension contributions regularly is essential. Having all your savings in one place will make calculating your retirement fund against your goals much easier.
Better return on investment
Merging your pots together could also reduce your fees and give you access to a wider range of investments. Although a better return can never be guaranteed, a wider investment choice and lower fees will give you a better chance of achieving one.
You could end up paying lower fees by just having one pension provider. Some schemes have tiered charges – the larger the fund, the lower the charges – so consolidation can help reduce some charges and potentially help achieve greater returns.
Combining multiple pensions is a task that should be undertaken by a financial advisor who understands the different types of pension you have and what, if any, valuable benefits you get by hanging on to different pensions.
If you’re not sure whether consolidating them is the right choice for you, talk to an adviser who can suggest the best course of action for you.
The value of a pension will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.