pension consolidation

Pros and Cons of Pension Consolidation



Posted on: 27th March 2023

Are you among the thousands of UK residents living with multiple pensions? It is a balancing act managing your pension savings throughout your working life and when you reach retirement age. In today’s environment, it makes more sense to consolidate all of your pensions into one to make it more beneficial. However, you need some additional knowledge to know if consolidating your pension is the right choice for you – and that is something that independent financial advisers Cheshire at Haven IFA know how to help you with. Let’s look at pension consolidation and help you understand if it is worth it for you.

How Many Pensions When You Retire

Without consolidating your pensions, your retirement will have several pensions swirling around to deal with. In the past, retirees would not have had so many pension pots to juggle as it was more common for workers to stay with their employer for longer periods.

As job-hopping became more frequent, workers accumulated many pensions during their working life. The average employee stays up to 4 years with an employer before moving on and has 12 jobs in a lifetime. For most people, having up to 12 smaller pensions will be inefficient and difficult to manage.

Multiple pensions make it difficult to understand how the value of your savings changes and if you are saving enough for retirement.

Keeping Track

One of the main benefits of consolidating your pensions is keeping track of a single pot over several. If you change jobs several times, you will constantly review annual statements and ensure every detail is updated, such as address changes when you move.

It means that you are less likely to lose details of a pension or overlook some of your savings. Multiple pensions make it difficult to understand if you are on track to a comfortable retirement, whereas independent financial advisers Manchester will be able to forecast pension value leading to your retirement age.

Lower Fees

Your pension providers charge fees for managing retirement savings, with every provider having their fee structure and making it harder to understand what you are paying.

Depending on the type of pension you have, you may also pay a platform fee, service fee or policy fee among others, reducing the value of your pension and income received in retirement. Consolidating your pensions and choosing a provider with lower fees helps your money to go further, especially if you have older pensions where thousands of pounds can be lost if not moved to better-value pensions.

If you are unsure of where you stand with pension consolidation, it is best to get pension advice Manchester from the team at Haven IFA.