Throughout your working career, you may have had multiple jobs and paid into multiple workplace pensions. Or, you may have set up several personal pensions yourself. Whatever the case, it comes as no surprise that once you decide to retire, keeping on top of multiple pensions can be a nightmare to deal with!

But, did you know that it could also be costing you financially, depending on the plan you or your employers had/have taken out?

By moving your pensions into one pot it’ll not only be easier to manage but also help reduce charges and likely allow for future growth (all of which is positive). But, this decision may not be beneficial for everyone, so you should always seek guidance from a financial advisor first.

To help you weigh up whether consolidating your pensions is right for you, here are some pros and cons…

The Pros

1. 1. Better potential investment performance – All pensions vary and so will how they perform as an investment over time. By moving your pensions into one pot you are likely to have a better investment growth potential.
   2. It is time-consuming to keep on top of multiple pensions – Each pension plan will have its own charges and a yearly statement to be aware of and most people won’t have time on their hands to juggle everything. Putting them into one pension will help to streamline your management and make the process easier.
   3. You can save on admin costs/fees – Different pensions have different admin fees to pay and therefore it isn’t cost-effective to have multiple plans. By combining your pension you could potentially save some money.

However, combining a pension isn’t straightforward, especially when comparing charges and investment performance. If you are ever confused or overwhelmed, it is always a great idea to contact a financial advisor.

The Cons

1. 1. You could miss out on valuable benefits and guarantees that are only available on your individual pensions – benefits such as enhanced pension commencement sums, protected pension ages or guaranteed annuity rates are just some of what you may lose if you were to combine your pensions, especially as they are not easy to spot.
   2. Potential high exit fees – you may have to pay a large amount of money to move providers.

Additionally, you should always make sure that any advice you get is from a firm of Financial Advisors who are regulated by the FCA (Financial Conduct Authority) as unfortunately, we live in a world where scammers are prevalent. Trusting someone that you shouldn’t could cause you to lose all your life savings.

Enhanced pension commencement sums allow you to withdraw more than the standard 25% tax-free lump sum when you first start accessing your pension.

Guaranteed annuity rates let you buy rates at a set percentage of your accumulated fund which could be higher than the ones offered in today’s market.

Final Thoughts

Combining your pension pot is a huge decision to make and not one that should be taken lightly especially as it relates to the money that you have built up over time and your financial security once you retire. However, if you feel like it is the right decision for you, then it could help you secure a more comfortable financial future.

For all your pension-related queries contact our friendly team of advisors today on 01255 688400 or drop us an email at info@coffeybrooks.com.

Coffey Brooks are a team of Independent Financial and Mortgage Advisers based in Clacton-On-Sea, Essex and are directly authorised and regulated by the Financial Conduct Authority.