Should you consolidate your pension schemes?

The average person will work in 11 different places throughout their working life and, as a result, may have paid into several different pensions schemes over the course of their career.

Having savings in more than one pension scheme can prove difficult. It’s hard to keep track of how they are performing and it’s even possible to lose track of one altogether.

A solution for this would be to consolidate your pension, or basically put all of your existing pension schemes into one. To do this you must transfer all of your current pensions either into an existing scheme or a brand new one, but there a few things you should take into consideration first:

What type of scheme have you previously paid into?

If you’re paying into a defined benefit pension scheme (also known as a final salary pension scheme), your retirement income will be based on what you’re earning when you retire. This may mean that you are better off keeping your money where it is. Any other type of pension scheme is dependent on the performance of your investments.

What fees are you liable for?

Different schemes have different charges. Depending on what those are and whether or not your current pension schemes are subject to an early exit fee, consolidation may or may not be the best option for you.

What features does your new plan offer and what features are you losing?

Before deciding whether to consolidate your pension scheme, it would be prudent to review the features you currently benefit from, for example a guaranteed annuity rate, and be sure you’re not “downgrading” by not having them. Some older schemes have conditions that are no longer available, such as unlocking your funds before turning 55.

In order to discover your pension features and other information, you should contact the scheme provider as they may not be included in your paperwork.

There are some other points you may want to review before coming to a decision, but here at Amethyst we provide a free, no-strings-attached first consultation to discuss all of your pension options. Why not get in touch and see what we can do for you.