Pension Consolidation: How to Combine Multiple Pension Pots
Keeping up with your retirement savings isn’t always easy, especially if you have contributed into multiple pension pots over the years. The fact is, many of us work for numerous employers throughout our lives, often joining a new workplace pension scheme every time. This translates into an awful lot of paperwork to stay on top of, making understanding your pension even more complicated than it already is.
Luckily, pension consolidation can make things easier to manage, and the dedicated pension team at Black Lion Wealth Management is here to educate and support you throughout the process as much as possible. We have all the answers to any of your questions related to how to consolidate pensions or how to combine your pension pots.
What is Pension Consolidation?
In a nutshell, pension consolidation means combining most or all of your pension pots into a single one. If you work for numerous employers throughout your career, you may build up quite a collection of different pension schemes and/or pension pots. You might also have personal pensions, especially if you were self-employed at some point.
When the time comes, you will have to decide whether to consolidate your pensions or leave them separate – and you don’t have to wait until retirement to make that decision! Determining the right course of action will depend on a number of factors, including the types of pensions you have, how much they are worth, how well they are being managed, and whether you have any special guarantees attached to them.
Consolidating pensions are complicated; that’s why talking to a professional pension adviser at Black Lion Wealth Management can help to ensure that you are ready for your retirement and have a full understanding of how to consolidate your pensions.
Benefits of Consolidating Pensions
Should you consolidate your pensions? While consolidating your pensions can mean some extra work, there are certain clear benefits that make it more than worthwhile. Here are some pension consolidation tips to keep in mind:
- Improved Investment Performance
“How to combine pensions?” is a natural question that comes to mind when you receive lots of different annual statements that show some pensions outperforming the others. The truth is, certain pensions will always have better investment options than their alternatives, and pension consolidation could help you take advantage of those.
Remember that better investment performance will translate into a bigger pension income in the future, and, therefore, a higher quality of life during your retirement years.
- Fewer Charges and Fees
Fees charged by pension plans should also not be overlooked. Consolidating your pensions could mean getting rid of higher charging plans, even though it isn’t always easy to find all the information related to the costs of a particular pension plan.
- Making Life Easier
Did you ever have to write countless change-of-address letters when you moved? If you don’t have to deal with many pension plan providers, you would have less correspondence and annual paperwork to keep track of. It will also be considerably easier to turn your pension into an income when the time comes to retire.
In addition, if you consolidate all your pensions on a modern investment platform, you will be able to manage everything online and eliminate the paperwork altogether.
The Case Against Consolidating Your Pension
- Added Advantages
Some types of defined contribution plans have additional benefits you would lose if you consolidate your pensions. That could include a guaranteed annuity rate (which is the rate at which your pension money is turned into an income) – this will almost certainly be higher than you would get on the open market. It could also include a higher than expected tax-free lump sum entitlement (25% is the normal maximum).
- Investment Detriment
If your pension is invested in a With-Profits fund, there may be a Market Value Reduction applied. Although that isn’t necessarily a show-stopper (the reduction might be pretty small), it certainly needs considering.
- The Cost of Pension Consolidation
For most people, asking a financial adviser to look at their pensions is the best option. That way, you can be sure that all the critical factors are accounted for. But you do have to consider the advice fee that would be payable.
And finally, some of the work in pension consolidation will be up to you – digging out policy numbers and addresses, for example.
How to Best Consolidate Your Pension?
While consolidating pensions on your own can turn into a lengthy and stressful ordeal, it doesn’t have to be complicated when you leave all the hard work to Black Lion Wealth Management. Here’s some pension consolidation advice to keep in mind:
Step 1: Contacting a Professional Financial Adviser
The first step to consolidating your pension is determining whether it is the right move for you. While pension consolidation, undoubtedly, offers valuable benefits, there are certain cases in which it isn’t the right option. Some pensions offer attractive features that you wouldn’t want to miss out on, while other types of pensions can’t even be consolidated!
Talking to an experienced financial adviser at Black Lion Wealth Management can help to clear the air.
Step 2: Paperwork Review
We will carefully go through all of the pension paperwork with you and contact all the providers on your behalf to help you get a clear picture of your pension arrangements. We use our own software that allows you to upload all of your documents and complete all of the fact-finding directly from your phone, tablet, or computer, making the process even easier.
Step 3: Recommendation
We will then provide you with a clear recommendation based on your retirement goals and preferences. The fact is, there is no single correct answer when it comes to managing or consolidating pensions, which is why tailored advice by a seasoned professional is of utmost importance.
Step 4: Pension Consolidation
If pension consolidation is the right way to go, we will take care of all the processes on your behalf, freeing you from confusing paperwork and lengthy phone calls.
Book a Free Pension Consolidation Initial Consultation with Black Lion
Without a doubt, pension consolidation offers an attractive array of benefits for both people nearing retirement and younger employees who have already changed several jobs. However, tracing and consolidating your pensions into one product can quickly become stressful and time-consuming.
Luckily, you are not alone in this. At Black Lion Wealth Management, we understand that pensions are complicated, so we work closely with our clients to make things easier to understand and educate them along the way about all the ins and outs of pension consolidation in the UK. Contact us today to book a free pension initial consolidation consultation with one of our expert pension advisers.
The value of Investments is not guaranteed and can fall as well as rise and you may not retain the amount you originally invested.
If you drawdown too much Income or your investments underperform, you run the risk of running out of funds.
The Financial Conduct Authority do not regulate inheritance tax planning and trusts.
Both Black Lion Insurance & Black Lion Wealth are Trading Styles of PRG Protect Ltd
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We are a dedicated team of financial advisers, with years of experience in guiding our clients to a solution that meets their specific needs. We specialise in helping both employed and self employed individuals, as well as business owners on a variety of solutions, which range from life insurance, income protection insurance, keyman insurance and shareholder protection insurance.
The guidance and/or information contained within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK