Consolidating your pensions

Many people collect a variety of pensions as they move from job to job, this can become confusing as the paperwork received each year is multiplied by each pension held.

If you have several different pension pots, there are potential advantages if you consolidate them into one.

You:

• Can keep track of and manage your pension savings more easily
• Might save money if you can transfer from higher-cost schemes to a lower-cost one
• Might open up a greater choice of investments if you’re consolidating your pension pots into one flexible scheme.

However, there are potential downsides to watch for too:

• In general it is a bad idea to transfer out of a defined benefit pension scheme – the guaranteed retirement income they offer shields you from investment risk.
• If any of your existing pension schemes offers Guaranteed Annuity Rates, then consider the implications carefully before transferring out – if you’re planning on buying an annuity with your pension pot these guarantees are valuable.
• Check whether you’ll be charged by any of your pension providers for transferring money out of their scheme.

Again, get financial advice before moving your pension schemes, unless you’re confident that you understand the costs, benefits and risks involved.

Transferring out of a Final Salary scheme is unlikely to be in the best interests of most people

The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.

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