Consolidate your pensions in one place

Consolidate your pensions in one place. Often, after working for a decade or so, it is not uncommon to have accumulated several pension saving pots. There is no right or wrong time to start thinking about pension consolidation.  But you might think about it if you are looking to start a new job or perhaps get closer to retirement.  In essence, pension consolidation means bringing your pension pots together.  Basically, you can manage your retirement savings in one easy, convenient place.  Sometimes, it can be difficult to understand whether you would be better or worse off combining your pensions.

Two types of Pension – Defined Contribution and Defined Benefit

There are two main types of pension, Defined Contribution (DC) and Defined Benefit (DB).  Defined Contribution pensions are where you build up a pot of money over your working life. Contributions come from you and possibly also your employer, providing you with an income in your retirement. Defined Benefit (or final salary) pensions are company pensions. Normally they pay you a set income based on how long you worked for the company and how much you earned. They provide a valuable guaranteed retirement income.

Should you consolidate your pensions?

There are many things to consider when looking to consolidate your pensions.  Such as whether your existing pensions have valuable guarantees that you could lose if you transfer out of the scheme.  Also, your current pension may have higher or lower product charges.  There may also be charges to transfer your pension to a new company.  Alternative providers may offer the potential for a better investment return than your existing pensions.  Also, there may be benefits from moving your money to a pension that offers funds with less risk.  This could be particularly important as you move towards retirement.  You may not wish to take as much risk with the money you have saved throughout your working life.

Over the years, you may have paid into various pension pots with various different employers and providers.  Whether you should consolidate your pensions in one place is not always straightforward.   If you would like help discussing the options available to you, please contact us on 01603 957599.

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