How to Consolidate Pension Pots

What is Pension Consolidation?

This term refers to the decision to consolidate all pensions into a single “pot”. It could be a combination of pension pots from different employers, or merging pensions from old employers and a private pension scheme you set up.

Why Consolidate Pensions?

It’s likely that you’re wondering “why should I consolidate pension plans?”. There are several answers to this question.

For a start, when you decide to consolidate pension pots, you’ll be able to manage your savings and keep track of your pension value and contributions more easily. You will also reduce the chances of losing track of that smaller workplace pension. It’s estimated by the ABI that over £19.4 billion is held in pension pots that have been left unclaimed.

Many people also opt for pension consolidation in order to make savings on the annual management fees they are required to pay – as some funds are cheaper than others.

Finally, depending on the scheme you choose, you may be able to grow your savings further.

Benefits of Pension Consolidation

So – should you consolidate your pensions? Firstly, you won’t need to take action of this kind if you have only ever paid into a single pension pot, or if you only have a personal plan (if you’ve always been self-employed, for example).

However, if you have paid into multiple schemes throughout your career which over 47% of people in the UK have been reported to and you do decide to consolidate all pensions, you’re likely to end up with a reduced amount of paperwork and all of your funds in one place. It has been reported by Pensions Age that Hargreaves Lansdown has seen a “big rise” in pension transfers during the most recent lockdown which they believe is due to people having more time on their hands. Doing so has allowed these people and many others to stay in control of their pension and retirement finances much more efficiently.

What’s more, you may find that you save money when you opt to consolidate pension pots. Funds may be spread between high-cost schemes and more affordable ones, so, if you transfer everything to a more affordable plan, you’re likely to end up spending less overall. Furthermore, many pension providers tier their fees and the more you have invested with them, the lower the charges you will pay for the management of your pension portfolio.

Depending on the flexibility of the single scheme into which you choose to transfer your funds, you may also have access to a wider range of investments including Ethical funds that are more in line with your social responsibility aspirations.

Pension consolidation may not be suitable for everyone, particularly if you have a defined benefit pension or a number of pensions that offer specific guarantees. We’d always recommend speaking with a pension consolidation specialist before you consider merging your pensions.

Best Way to Consolidate Pensions

To transfer your pension yourself, you can make contact with the administrators of the scheme or schemes you wish to leave and inform them of the fund into which you would like your savings to be paid. This can be a complex request, with lots of form filling, documentation signing and spending time speaking with each individual pension provider.

In certain circumstances, your request may be refused. For instance, if you have a Defined Benefit pension over £30k, you need to get financial advice before a pension provider will accept the transfer, plus some pension providers are not accepting new business. – The process of consolidation may become quite complex depending on the service you are liaising with.

To avoid any problems, the best pension consolidation approach is to use the services of a financial advisor or specialist. They may be able to manage your consolidation on your behalf, help you to avoid any pitfalls, ensure that consolidation is right for you  and make sure you are invested in the best pension fund for you

When combining your pensions, always remember that Capital is at risk and you may get back less than you invested

Why Choose Hilltop Finance to Consolidate Your Pensions?

Hilltop Finance is a team of trusted and unbiased financial advisors with over 100 years’ worth of combined experience in helping customers make the most of their money and we’re incredibly proud of our 5-star Trustpilot rating.

We work to the highest possible standard at all times, treating each of our clients as a unique individual and placing them right at the heart of everything we do. We work totally transparently to ensure that you understand every step of the process.

If you’re struggling to work out how to consolidate several small pension pots from different employments or other sources, we can help you achieve the very best result for the benefit of your finances.

So – if you need to combine all of your pension pots into a single, easily manageable fund, why not let experienced specialists help you to expertly navigate each step?

Contact Hilltop Finance today using our straightforward online contact form for further information.