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Introduction

As you progress through your working life, you might accumulate more than one pension. 

Managing multiple pension schemes can be overwhelming and time-consuming. The time and effort required can be onerous.

This article will talk about how to combine your UK pensions. It will cover the benefits and give you some tips to help you. 

What is Pension Consolidation?

This is when you combine more than one pension into a single plan.  

Combining your pension pots simplifies your savings and gives you more control.  

It is worth checking if you have any old pension plans. This could be a workplace pension or a self-invested personal pension (SIPP).

You might even have other defined contribution pensions such as a stakeholder or personal pension.

It is worth reviewing your pension plans to see if you should transfer.

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What are the reasons for transferring your pensions?

1. Simplicity. You can consolidate all your retirement savings in one place. This is easier than handling multiple pension accounts. This will make it simpler for you to track and manage your investments. 

2. Possible lower costs. Combining pension accounts could result in lower charges. 

3. More control. Combine your pensions to have more control over your investments. The right pension provider will help you match your risk tolerance and retirement goals.

4. The possibility to improve your investment choices. Combine your pensions to see how well your investments are doing. This helps you identify investments that aren’t doing well. You can then make smarter choices to get better returns.

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Should you Combine your pensions?

To explore your options, start by making a list of the pensions you have. Each Pension company will send you a statement each year. If you do not receive statements each year check they have your correct address. 

If you need help finding your old pensions the pension tracing service could help you. To access the government service please click this link – Pension Tracing Service

It is worth keeping all your paperwork. Before transferring your pensions, make sure it is the right thing to do. Some pensions may charge you for transferring out. Other types of schemes offer benefits you may want to keep.

You might want to consider the following aspects:

Is my pension based on my final salary?

A final salary pension scheme provides a guaranteed pension in retirement. These schemes are also called defined benefit pension schemes. The pension scheme will increase each year and have a spouse’s pension. The amount depends on your salary and years of work.

Transferring final salary scheme benefits is extremely costly and complicated. As a company, we do not carry out this type of advice.

Are the annuity rates in my plan generous and guaranteed?

Guaranteed annuity rates are a feature of some pension plans. They provide a guaranteed income for life at a fixed rate. These rates are higher than the rates available in the open market.

Older pension plans can sometimes provide guaranteed annuity rates. The valuable guarantees can be useful for those who possess them. Guaranteed rates offer a higher level of income compared to standard annuity rates.

Some old plans will have a set format for the guarantees. It is not possible to change this, for example, a level pension.

Although the guarantee might seem good you need to decide if it is the best option for you. We recommend to our clients that they choose an income that increases in line with inflation.

You should check the pension plan’s terms. If you have guaranteed annuity rates or any other guarantees then we would recommend seeking professional advice.

Do I have protected tax-free cash?

Protected tax-free cash may be available in certain pension plans. It allows people to take a larger tax-free lump sum when they retire. The protected tax-free cash is higher than the standard tax-free cash allowance.

To qualify for protected tax-free cash, you must have been in a pension scheme that provided this benefit.

The rules for getting more tax-free cash can differ based on the pension scheme. 

Not all pension plans offer tax-free cash. It is advisable to get pension advice from a financial consultant. They can determine if your plan incorporates this aspect.

Are there any exit fees or charges for leaving?

These fees may apply if you transfer your pension savings. If they are substantial, transferring your funds could prove to be unwise.

What are the pension scheme charges?

When combining pensions, you should compare the costs and benefits of each plan. Here are some steps you can take to compare charges:

1. Research: Start by researching different types of pension plans you own. Look on their websites or contact them to inquire about their charges.

2. Request fee breakdown: Ask each pension provider for a detailed breakdown of their charges. You can then understand the costs and how they are calculated.

3. Compare fees: Once you have the fee breakdowns from different services, compare them side by side. Look for any differences in charges to get an idea of the costs for each plan.

4. Consider the value: While comparing charges, consider the value you will be getting from each plan.

Look at the services they offer, such as investment options and services. Evaluate whether the potential benefits outweigh the fees charged.

Take professional advice before you act

If you’re unsure about pensions, you should hire a financial adviser. They can provide personalised financial advice. They will help you make the right decisions regarding combining your pensions. 

Avoid pension consolidation companies that aren’t independent.

Your adviser will review your financial situation as well as your goals. They will then recommend the most appropriate advice for you.

Make sure you ask your adviser how they will help you. Most good advisers will offer some form of cash flow planning to help with the advice they are giving. 

This is an in-depth analysis of your current pensions to date and the likely income they will produce at retirement. They will be able to identify any shortfalls and what you need to do.

A financial advisor can help you understand pension rules. They will make sure pensions are set up correctly. Consider working with a specialist to get expert advice and support. 

Be aware of pension scams

Pension scams are common in the UK. Cold calling is banned in the UK for pension advice. Other scams include unusual investments, tax avoidance and fake pensions. 

Scammers use various tactics to convince people to transfer their pensions. They may promise high returns and that they are the best pension consolidation service. These schemes are illegal and can result in heavy tax penalties.

To avoid pension scams, take precautions. Be cautious of unexpected offers. Verify the identity of the company or person. Seek advice from experts. Question high returns. Protect your personal information.

Conclusion

Finding the right independent financial adviser is crucial. 

In most cases, the cost of advice will prove valuable and get you onto the right track.

Understanding where you are and what you need to do to improve your pension provision is important.

Start planning your financial future and ensure a comfortable retirement.

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Help Guidance and Advice

Pension Wise

Pension Wise

Pension Wise is a government provided service for people aged 50 or older with a pension in the United Kingdom. It can assist individuals in understanding the kinds of pensions they have. How they can access their funds and the tax consequences of their various choices. However, it only offers pension guidance and not financial advice. You can arrange a pension wise appointment from their website.

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Do you have a Pension Question?

We are happy to help if you have questions about your pension and your situation. We are open normal working hours Monday to Friday, 9:00 am to 5 pm

Call us on 01454 321511

Alternatively, you can email us

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Retirement Advice

Many of our clients are based in Bristol, Bath and South Gloucestershire. However, we also deal with clients throughout the South West and the UK. If you are retired, looking to take benefits, or want to find the best way to save for retirement, we can help you.

We can provide advice on all aspects of pensions. This can include Personal Pensions, Self Invested Personal Pension arrangements, Stakeholder, Group Pension schemes and pension annuity purchases.

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