Is It Really Worth Combining My Pensions?

We all have that kitchen tabletop or drawer (or a ring binder, if you are much more organised) with a pile of papers and letters to look at ‘on a rainy day’, right? In my experience, this often also includes pension paperwork as many providers tend to make these statements so complex, confusing, and difficult to read and understand.

In the 1980’s, many of us ‘contracted out’ of State Earnings Related Pension Scheme (SERPS) or set up a Personal Pension Plan of our own. Today, with the recent advent of Workplace pensions and an average employment term of six years*, this all adds up to an awful lot of paperwork piled up in your filing system of choice.

When I ask individuals how much money they have in their bank or building society accounts, they generally know to the nearest £10. However, ask the same question about their pension plans and they often shrug their shoulders, look confused, and offer a blank facial expression. This can be quite scary, considering that the value of these pension plans are likely to be in the many thousands – or hundreds of thousands – depending on how old they are.

Consolidating multiple pension pots into one pension plan, therefore, makes sense, and can make managing your money easier to understand, control and keep track of.

This is where we can support, advise, and be of assistance, by helping to review what you have built up over time. Pension legislation has changed many times over the years, with many different types of pension plans available. It is therefore important to understand the types of pension plans you have, as some of these may have valuable benefits or guarantees that are worth keeping. For example, if any of your pensions are defined benefit plans, often referred to as Final Salary or Career Average Revalued Earnings (CARE), with a promised amount of pension income at retirement.

If you are struggling to find one, we can help you trace a lost or old pension plan. There is also a little-known free Government service available to find contact details to search for a lost pension.

There are many benefits to consolidating your pension plans, which include:

• Understanding how much you have saved to date, all in one place, online, and available 24/7.
• Investment of your pension pot in a fund that is suitable for you and aligned to your attitude to risk and profile.
• Monitoring how your investments are performing.
• Potential for lower fees: pension provider service charges, platform fees or fund management charges.
• Understand what fees, charges, and services you are paying for.
• Estimate how much income you might get at retirement and whether this is enough, or if you need to add and save more before retirement.
• Receive only one pension statement per year.
• Only one company to contact if you change address.
• Tidying up that kitchen tabletop pile of pension paperwork that you have been meaning to do for a long while!

Retirement has also changed over the years, with many individuals now phasing into retirement, reducing their hours, or looking at consultancy or Non-Executive Director (NED) work. Equally, with no compulsory or statutory retirement age, some individuals find themselves having to continue working or, conversely, they simply enjoy what they do and want to continue working.

A pension plan that is flexible and provides income options to fit in around your needs, aims and objectives is therefore important – coupled with intergenerational planning considerations and inheritance tax planning, in the event of death.

Do not forget that your State Pension is separate and often differs from the age you can get access to your pension or workplace pension. State Pension Age has changed over the years, increasing from 60 and 65 to 66, 67 and possibly even longer. You can find out what your State Pension Age is and how much this might be worth by obtaining a State Pension forecast via the Government website.

We take the responsibility of recommending where you invest your money very seriously. That is why we have set up our Central Investment Proposition, to give you peace of mind, confidence and security that your finances are in safe hands.

If you require any assistance in getting to grips with your own pension, please do not hesitate to get in touch with an Integrity365 Independent Financial Adviser on 0117 450 1300.

Source: Association of Accounting Technicians Survey 2018