Pension consolidation

If you’ve had more than one job during your working life, it’s likely that you’ve paid into more than one defined contribution pension scheme.

Consolidating your pension pots means transferring them into a single plan, and this can offer significant benefits. At My Pension Expert, our advisers can recommend portfolios that have the potential to deliver healthy growth within a risk profile you’re comfortable with, identifying the options that align with your pension objectives. 

Of course, when considering switching up your pension strategy, you should always consider what the positive and negative impacts could be. So, what are the benefits?

What are the benefits of consolidating pension pots?

The main reasons to switch typically include reducing the charges on your scheme, particularly if you’re part of an older plan with high fees. You might also want to access different investment options to make your money work harder or change your level of risk.

Pension consolidation can also help you access more flexible income options if you’re planning on retiring soon. Many older plans offer a limited range of income options, so transferring to a newer plan will make sure you have access to the retirement products best suited to your needs.

Finally, you might just want to simplify your retirement strategy by combining all of your pots into one. One pot typically equals less paperwork, fewer fees to keep track of, and less overall administration, making it ideal for people looking for a streamlined retirement plan.

At My Pension Expert, we conduct thorough checks on your current plans and compare these with other plans from providers across the market. We’ll analyse your fees and investment options to see if consolidating or transferring your funds could put you in a better position.

Why might someone decide not to consolidate pensions?

There are a couple of key reasons why consolidation might not be right for you. So, you should consider the following:

  • Do any of your existing plans have any unique benefits, such as protected tax-free cash or enhanced death benefits?
  • Do any of your policies have exit penalties that could cancel out the benefits of transferring to a new provider?
  • Do you have a defined benefit pension? We don’t usually recommend transferring this type of pension – it’s hard to beat!
  • Are you still paying into your pension, and does your employer match your contributions? You may lose out if you switch.

On top of these questions, it’s important to remember that there’s no guarantee that your new fund will perform better than your existing one, and past performance can’t be used to predict future performance. 

That being said, our advisers recommend portfolios that offer prudent fund management and market analysis, competitive fee structures, and investment diversification, all with the aim of putting you in the best position to meet your objectives. We also make sure to answer all of the above questions as part of our pension checks, so that you can be confident that you won’t miss out!

So, should you consolidate?

Pension consolidation can be a valuable strategy for simplifying your retirement planning, enhancing oversight of your pension savings, and potentially reducing costs.

Speaking with our independent financial advisers can help you assess your current situation and work out which, if not all, of your pensions could be consolidated to improve your position at retirement. And if consolidation isn’t right for you, we’ll tell you.