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Home > Blog > Pensions > 6 Benefits Of Merging Pensions
If you’ve changed jobs a few times throughout your life, you might find that you’ve got a few different pension pots in different places. You might have even forgotten about a few! If you’re thinking about merging your pensions, we’re going to take you through the benefits of consolidating your pensions and whether it’s the right thing for you to do.
Merging pensions or consolidating pensions simply means you take your multiple pension pots and combine them so they’re all in one place. You can do this if you have two or more pensions with different providers. It’s also known as ‘combining’ your pensions as you move your money out of one scheme and into another. It can also be known as pension consolidation.
Combining pensions can be worth it as it can give you peace of mind that all your retirement money is in one place. If you have several pension pots there can be advantages to transferring them into one pot which we’ll detail below.
Thinking about amalgamating pensions? Here are 6 pension consolidation benefits to consider:
Nobody likes paperwork and if you decide to merge your pensions you’ll benefit from less administration, less paperwork to go through and fewer documents to store.
When your money is in one place, it could be much easier to manage. It makes it much simpler and straightforward to assess how your money is performing and if you want to make any changes, you only have to think about one single pot. Easy!
Different pension providers charge different administration fees and so having several smaller pension pots could work out more expensive than consolidating them in one place – even when you factor in a consolidation fee.
Newer pensions can be more flexible when accessing your money in retirement and so if one or more of your pension pots are quite old, you could be missing out on newer benefits and flexible withdrawal schemes.
Certain pension providers only offer a limited range of investments and so you could find that some of your pension pots might be invested in funds that aren’t suitable for you. By combining them, you could have more choice in where your pension is invested and could be better off when it comes to retirement. It also gives you more control over your level of risk.
Combining pension pots means it could be easier for you to withdraw money from your funds. If you have multiple pensions, you will need to contact multiple providers to make withdrawals, and thai could be very frustrating, especially it each pension pot is small in value. Moving your money into one place could make things easier, and who wouldn’t want an easier life?
Despite there being a range of benefits associated with having all your pension pots in one place, there are a few reasons why you might be better off leaving them in multiple pots.
For example, you could lose out on specific benefits from one or more of your current schemes if you were to transfer to another provider. You might also have a particular pension pot that is performing really well in which case you wouldn’t want to move it.
Also, some older pensions can contain ‘exit penalties’ or guaranteed minimum pensions. If there are any exit penalties on your existing policy, they could cancel out the benefit of transferring to a new provider.
Checking each of your separate pension pots and looking through their specific benefits and investment terms can be pretty time-consuming and to be honest, you might not know what you’re looking for. That’s why it’s a good idea to get an independent pension advisor to conduct a pension review for you and they can give you the best advice based on what they find.
We’d be happy to do a pension review of all your different pots to see if consolidation would be beneficial to you or whether you should leave them in different schemes.
Because of the government pension auto-enrolment scheme, your employer is obliged to enroll you into a scheme. That pension won’t automatically follow you if you switch employers. It’s up to you whether you leave your old pension where it is or move your money into your new employer’s workplace pension scheme or your own personal pension. Many people decide to consolidate this type of pension so they just have one pension pot regardless of how many places they’ve worked.
Okay so if you’ve got to this point in the article and you’re thinking how do I combine pensions? First of all, thanks for reading! We hope you found it helpful. And second of all, your best bet is getting an independent professional pensions advisor to do it for you. Or at least have them look at how your pensions are performing. And it just so happens that’s what we do!
For more information about merging your pensions or to chat about anything at all to do with pensions and retirement planning, give us a call at Hilltop. We’ll take a look at your existing pension pots to see how they’re performing. We’ll then be able to give you tailored advice that will see you get the most out of your pensions.
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