I wrote a blog with a brief introduction to pensions back in July’20, so if you’re a little rusty, take a quick read here.
I’m 39 at the time of writing and with each of my 6 employers to date, I’ve started a pension. 5 of them were defined contribution (DC) schemes, which are pots of money to help fund your retirement. I have consolidated mine and unsurprisingly managing it here at WKM. Joining a workplace pension is generally a good idea, as your employer will make contributions alongside yours, meaning your pension pot could grow more quickly than you might be able to do on your own.
If you’re fortunate enough to have a defined benefit (DB) scheme then you are generally better to leave them alone.
But 5 DC pensions? Who has the time to review and manage them? Should you consider consolidating them? There are some potential benefits from consolidating….
- Reduced administration
- Potentially reduced fees
- Ability to focus the investment strategy on your goals and aspirations
- Easier to keep an eye on them
- May have additional flexibility in future
- Easier for your beneficiaries to find, should anything happen to you
But there may be downsides too…
- Your pension may have some benefits that you could stand to lose
- It may cost you to move and consolidate
- Investment opportunities could be reduced
What should you do?
- Firstly do some admin – find your latest pension statements
- Where is your money invested? How has it performed for you?
- What are the fees?
- What options do you have – can you transfer it for free
- Are you able to make further contributions?
- For your current workplace scheme, you will probably need to leave it open to allow your employer contributions to continue
2. Think about where you might want to move it to
- You could consolidate into one existing pension
- You could open a Self Invested Personal Pension (SIPP) and consolidate there
- Unless you’re using a financial advisor, this is likely to mean you need to take more control and make more decisions
- But SIPPs are generally very flexible when it comes to retirement
- What are the investment opportunities?
- What are the fees?
Then make a decision! Either way, taking the time to get to know your pensions a little better is a good thing. 👍
If you do decide to consolidate, the good news is that many pension providers will do the heavy lifting for you, but it’s your decision to instigate the move.
Good luck – if you’d like to talk to us about your options, get in touch -> firstname.lastname@example.org
Thanks for reading and