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Pension Pots

How to simplify your pension if you have multiple pots

Our working lives have changed hugely over the last few decades. Whereas it used to be the norm for people to stay with the same employer, it’s now far more common for people to change jobs multiple times. Nothing wrong with that – but it does seem to have had consequences for people’s pensions, with an estimated £9.7 billion in unclaimed UK defined contribution pension funds.[1]

How do people lose track of their pension pots?

It’s surprisingly easy. As we change jobs, move home, or the companies we used to work for change owners or close down, it’s easy to lose contact with pensions savings providers. And once that happens, it can be difficult to track down your pension savings again.

Changing jobs frequently makes it more likely that you’ve collected a number of different pension pots. Life happens, and our pensions aren’t always top-of-mind – making it more probable that you’ve lost track of them somewhere along the way.

How do I check for a lost pension fund?

If you think you might have lost a pension pot from a previous job, you can use the

government’s Pension Tracing Service at Find pension contact details – GOV.UK (www.gov.uk)

Consolidating your pension pots

If you’re one of the millions of people with multiple pensions, it may be appropriate to consider consolidating your defined contribution pension pots and bring them together.

This can simplify your finances, make it easier to keep track of your retirement savings and even save you some money in administration fees.

What is pension consolidation?

Pension consolidation is the process of combining multiple pension pots into one single pot. This can be done with a pension transfer, or by opening a new pension and transferring your other pensions into it.

People do this to make it easier to keep track and manage of their retirement savings, or to try and get a better rate of return on their investment.

If you have multiple pensions with different providers, you may also be paying multiple annual fees. Consolidating your pensions may help you save money on these administration fees.

Reasons why you may not want to consolidate your pensions

Before you dash off to consolidate your pensions, it’s important to know that not all pension types can (or should be transferred). You need to understand the what’s going on with your particular pensions, so getting professional advice is a must.

Some reasons not to consolidate:

  • Loss of valuable benefits that are specific to certain pension schemes. For example, guaranteed annuity rates, or some schemes may offer better death benefits than others, so consolidating your pensions into one pot could mean giving up this valuable protection.
  • Paying higher fees: Some schemes may have higher charges than you are actually currently paying.
  • More difficult to access: It’s important to remember that once you consolidate your pensions, it may be more difficult to access them early if you need the money for an emergency.

You might also need to consider any exit fees that may be charged. Talis IFA offers you the professional advice you need to be able to compare the features and benefits of the plan(s) you’re thinking of transferring.

Beware of pension scammers

A final word of caution. Pension savings are big targets for fraudsters, and unfortunately many people get caught out.

We don’t want to be alarmist, but it’s safer to follow a general rule of thumb that if someone contacts you unexpectedly offering to help you transfer your pot – especially if they’re pushing a particular deal – it’s likely to be a scam.

If you’re concerned, contact the Financial Conduct Authority (FCA) to check they’re legitimate before giving out any personal information.

If you’re thinking about consolidating your pension pots, and would like some professional, objective advice, please give us a call. It can be a complex process, so we’ll be delighted to take a look at your existing pots, make recommendations and talk you through the process.

We research the whole market, and give you straightforward, transparent advice. If leaving things as they are is the best option for you, we’ll say so. Our advice is always based on what’s best going to help you make you money work for your future.

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