1. You’ve had jobs with several employers and pensions with all or at least some of them
The days when you would spend your whole working life in just one job are long gone for many of us now. This may mean that by the time you hit middle age you could easily find yourself with several pension pots with multiple providers, that you have collected along the way. Pension rules change, the mix of assets may not match your risk profile now, some companies and funds may have merged, or been taken over, and you find it hard to keep on top of it all.
Having everything under one roof could make it easier to monitor and manage, with less paperwork and more chance of noticing if your investments are performing badly or if you’re paying too much in charges.
2. You’re in danger of forgetting where some of your money is
It might seem unlikely that you would forget about thousands of pounds of your own money. Yet reports show that there are billions of pounds sitting around in unclaimed pension plans. One (or more) of these pensions could be yours.
Moving a number of pension pots into one place should make it less likely that you would lose track of some of your pension savings. It also means that you will only receive statements from one source and not multiple companies throughout the year. At Otus we can also run a check to see if there are any pots that you may have overlooked.
3. You’d like more control over where your money is invested
Workplace pension savings often go straight into default funds chosen by the firm, which might not match your investment objectives or your appetite for risk. Choosing your own scheme can make it easier to understand how your fund is being invested, and give you more control over where your money goes. One option is moving them into a pension like the ones we offer at Otus. This way, you can work with your adviser to map out your goals for retirement, with the flexibility to build your own investment mix, which will match the amount of risk you would feel comfortable with.
4. You’re moving to a new job (again)
Joining a new employer– and potentially yet another pension scheme – can be the obvious prompt that it’s time to re-focus on your retirement goals and possibly combine your pension pots.
This isn’t always entirely clear cut though, especially if you anticipate more career moves in the future. There are also instances where a pension pot is best left where it is. Final salary (or defined benefit) schemes are typically more generous, for example, with valuable guarantees that might be lost if you transfer. At Otus we offer a no obligation initial meeting to find out what you have now, what plans you have for retirement and then we will show you how to put in place a long-term financial plan to achieve your retirement goals.
5. You’re 55 years old (or getting there)
Once you’re 55 or over, you have much greater freedom as to how you can access your pension savings. The extent to which you want to take advantage of that freedom may influence how you decide to consolidate your pension plans. You’ll want to take a very close look at how flexible the pension you’re thinking of consolidating into actually is when it comes to taking your money out. At Otus all our pension planning uses schemes that give our investors maximum flexibility so you can rest assured that your plan can adapt with your changing situation.
6. You’re approaching retirement
It is no surprise that as you approach retirement your pension investments can suddenly seem much more interesting than ever before. Consolidating at this point can make sense if you want all the money in one place as you make your retirement plans. As your investments are now likely to be worth a substantial amount of money, you might want to check the fees you’re paying too – as these might also have grown over the years.
Also, at this point you should watch out for any exit fees and other costs of consolidating. These are always an important consideration, but even more so when you may not have time to recoup anything you spend before you retire, even if you move to better performing investments.
7. You’re paying too much in administration fees
Multiple pension pots can mean multiple fees and extra costs. When charges for fund management, administration, tax wrappers and platforms are all included they can add up quickly, potentially taking a big bite out of your investment growth.
You should pay close attention to the fee structure of the pension you’re consolidating into, as some may be better suited to your needs. For example, at Otus, we charge flat fees for a pension report, and sliding scale fees based on the portfolio value, so we could potentially offer better value when it comes to administering larger investment portfolios.
8. You would like more information on how your pensions are performing…
Some pension companies are not very good in keeping in touch with their clients. You can often find that valuations are sent out at least 12 months apart. This makes it difficult to keep on top of your retirement planning and we are all busy people these days. We are now living in a connected world, meaning that you want to find out information very quickly. Consolidating your pensions on to the modern online platforms can mean that you can get a valuation any time and can keep up to date with the performance of your portfolio. Naturally, Otus give all our clients online access.
9. You know you need a long-term financial plan
Pensions are a very important part of financial planning, but there are other assets that can help you to plan for retirement. At Otus we use a tool called lifetime cash flow that allows us to dynamically plan your financial future. This uses all your assets to plan how you can fulfil your goals in retirement. Our aim is to show you how to plan for your future without any fear that you will run out of money.
Showing the signs? Here are a few other things you should consider before you consolidate
Before you go ahead with combining your pension pots there are some good reasons why you should stop and think.
Transferring certain pots could have downsides too, such as exit charges that could offset the savings from moving, or the loss of valuable benefits such as those in final salary schemes, which usually come with retirement income guarantees unobtainable elsewhere. That’s why regulated advice is highly recommended (and often mandatory) before transferring from final salary schemes. Otus will always give you best advice on the way forward, and quite often we advise clients to stay in some schemes if it is in their best interest.
If you do keep several pensions open it’s essential to keep track of them, notify the various providers of any change of address and check statements regularly for any possible issues such as charge increases, or fund closures.
These articles are designed to help investors make their own investment decisions. They do not constitute a personal recommendation to invest. If you have any doubts as to their suitability you should seek independent advice. Please be aware that the value of investments (and the income from them) will fall as well as rise, so you could get back less than you invest.
Your existing pension may have valuable benefits which you might lose when you transfer. Laws and tax rules may change in the future without notice. The information here is our understanding in August 2017. This information takes no account of your personal circumstances which may have an impact on tax treatment. Past performance is not a guide to future performance. Before initiating a transfer you should seek professional advice on the merits of the proposed transfer that is specific to your circumstances.