While retirement planning might not be your top priority right now, planning a fulfilling retirement becomes increasingly important as you age. Retirement opens opportunities to step away from work and enjoy some of life's excitements such as travel, sports and quality time with loved ones.
For some, the state pension offers sufficient income to cover basic needs. Yet, for many, they realise that additional retirement savings are essential. Employers often encourage contributions to pension schemes, resulting in multiple pensions over the years. This is where the concept of pension consolidation comes into play.
What does pension consolidation mean?
Throughout your career, you might accumulate pensions from various employers, leading to a scattered collection of pension pots or schemes across different providers. If you've been self-employed, you may even have several personal pensions.
Pension consolidation is the process of combining all these pensions into one unified retirement income. It begins with a thorough review of your work history to ensure all past pensions are accounted for.
Is pension consolidation right for you?
You may decide to combine your pensions to save money, get better growth, and make your pensions easier to track and manage.
Each pension will have management fees, which may vary depending on the pension; you could save money by moving your pensions into the fund with the smallest fees; a financial planner can help advise you about this and may also be able to help you find a fund with lower fees.
You may also achieve better growth by merging pensions. Alternatively, your financial planner may recommend you change to a whole new fund.
Why consider pension consolidation?
Managing a single pension is undeniably more straightforward than juggling multiple accounts. It streamlines your financial life, allowing you to monitor your retirement savings with ease. When retirement approaches, accessing one or two pensions proves far more convenient than dealing with multiple.
Effective pension management goes beyond checking balances; it involves assessing your risk profile, which evolves as retirement nears. Simplification becomes a significant asset when it becomes time to access your pension.
Are there any reasons not to combine your pensions?
Some pensions have valuable benefits and guarantees, which means that transfers will make you lose out on these. Consolidation needs to be carefully considered, along with deciding what your objectives for retirement are.
We are here to help you make the best decision for your retirement plan. We can thoroughly evaluate your pensions and explore the available options.
If pension consolidation is something you are considering, get in touch with our team today!