Many people are likely to end up with several pensions by the time they reach retirement age, particularly if they have held multiple jobs. However, these can be hard to keep track of, and individuals may not even know how much they are set to receive in retirement.
Combining pensions together – also known as pension consolidation – is often posited as a way to ensure nothing is forgotten.
For the upcoming Pension Awareness Week, Express.co.uk spoke exclusively to Colin Dyer, financial planning expert at abrdn, who shared five tips for those considering consolidation.
Firstly, before doing anything at all, Mr Dyer stresses it is vital for Britons to check how many pensions they have, as well as what these arrangements offer.
Some arrangements have specific benefits and guarantees a person would be loath to give up, such as death benefits or financial guarantees.
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If they do not have this, then they can make use of the Government’s online Pension Tracing Service.
Mr Dyer stated: “If you’ve found a lost pension and you want to make it easier to take control of your savings, this is when you might want to consider consolidating your pension pots into one.”
When it comes to making a decision on pensions, seeking advice is likely to be a sensible course of action.
This is because the decisions people make now could end up affecting them for decades to come, and thus it is important to plan carefully.
Pension consolidation is not right for everyone, and there is no guarantee individuals will get more money as a result.
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Mr Dyer continued: “If you have any pension pots worth more than £30,000 you may have to take financial advice – and it’s such an important decision that you may want to take advice even if it’s less.”
He pointed Britons towards MoneyHelper, as well as other forms of help such as PensionWise, which could help people to consider the pros and cons.
Next, Mr Dyer says people should always weigh up the benefits when it comes to pension consolidation.
There are various reasons as to why people may choose to consolidate, however, the process can slash admin and paperwork, making it easier to keep track of one’s savings.
Mr Dyer added: “Another reason people move their pensions is because they’re looking for a plan that offers a better return on their investment to boost their retirement savings.
“If you are consolidating pensions for ease, it is worth noting that once the pensions dashboard project is introduced this will all be done for you.
“The pensions dashboard, which is a Government objective, will allow you to see all of your pension pots all together – in an online place that you can choose. It’s expected to be up and running in the next couple of years.”
Finally, if a person does choose to go ahead, Mr Dyer states they will have to provide specific information about their pensions to their new provider.
He explained: “All you need to get started is the name of your provider, pension plan number and an approximate value – you can usually find all these on a recent statement.”
While consolidating pensions may seem like a complicated process, people should be comforted by the fact the experts will be able to do most of the work.
If any questions or queries arise during the process, then a new pension provider should be on hand to help.
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