An estimated £27 billion of pensions are currently ‘lost’ in the UK. Combining pensions into a single scheme could be a solution for some people.
‘Pension consolidation’ is the process of combining two or more pensions into a single scheme. Many people have worked in multiple jobs with various pension schemes run by different providers and it can be very easy to lose track of pensions owned – UK pension pots worth nearly £27 billion are currently deemed to be ‘lost’[1].
What are the benefits?
- Simplification: A key advantage is the ability to keep track of your pension funds in one place. If you are a JM Finn client, using our pension consolidation service will mean your investment manager will be a single point of contact for both your investments and your pension;
- Less paperwork and administration: If you have worked in multiple jobs, it can be very difficult to keep up with the administration for each of your pensions – consolidation can greatly streamline the paperwork you receive;
- More retirement options: Newer pensions can be more flexible, giving you more options to access your money when you are retired;
- Better ongoing servicing and management: With pensions across multiple schemes, it can be much harder to spot when a fund is underperforming. In a single fund, it is much easier to monitor the performance of your pension on an ongoing basis to ensure your money is working as hard as possible for you;
- Ease of wealth transfer when you pass away: Pension funds are typically free of inheritance tax and having a single pension can make the transfer of your wealth to the next generation a smoother process for them.
Can I still consolidate my pensions if I have already retired and am drawing from one or more of my pensions?
Yes if you are in drawdown then you can still consolidate your plans.
Are there any circumstances where consolidating a particular pension might not be advisable?
- Some pensions have inbuilt benefits such as guaranteed annuity rates which may be lost if the pension is transferred;
- If an existing pension has high exit fees, it may be best to avoid incurring them by transferring it.
Our wealth planners can conduct a review of your pensions to assess their suitability for consolidation. There is no obligation for you to go ahead with consolidating your pensions unless you choose to do so.
For further information about pension consolidation, or to find out about other ways in which our wealth planning team could assist you to simplify your finances, please contact us.
The information provided in this article is of a general nature. It is not a substitute for specific advice with regard to your own circumstances. You are recommended to obtain professional advice from a professional accountant or solicitor before you take any action or refrain from action.
[1] https://www.abi.org.uk/news/news-articles/2022/10/call-on-uk-retirement-savers-to-take-action-on-26.6bn-in-lost-pensions/
