By Tracy Storer, Senior Partner, Chorus Financial.
If you’ve had more than one job since your career begun, it’s likely you’ve got pensions with different providers. It can be difficult to keep track of them all, and there’s a chance your money could end up in expensive, poorly performing funds as a result.
So, should you consider transferring them all into one easy-to-manage pension plan? Here are five reasons you might want to think about it:
1. More convenience
It’s much easier to manage one pension than half a dozen. Rather than have to check values with a number of pension providers and schemes, you only have to deal with one.
2. Greater control
Bringing your pensions under one roof can also give you greater control. For example, perhaps one of your old pensions has limited investment choices. Transferring to a single pension could let you cast off these shackles and take greater control. That doesn’t mean you have to pick your own investments if you don’t want to, you can appoint a local adviser to manage your pension plan for you.
As with most investments, the value of pensions can go down as well as up, so you can get back less than has been paid in.
3. Appoint a local adviser
UK based pensions will often only allow UK based advisers to manage them, and following Brexit, UK based advisers can no longer advise Spanish residents unless they have special arrangements in place. This can leave people who live outside the UK in a position where some or all of their pensions limit them to seeking local advice. Moving all of your pensions into one place may mean moving them into a product such as an international SIPP, a UK based pension, or a QROPs, which are generally based in Malta. This will allow a Spanish based financial adviser to manage them on your behalf.
4. Potentially lower costs
Older pensions sometimes have higher charges, so transferring to a modern one could reduce the cost of administration and fund management. And even a seemingly small reduction in the charges you pay could increase your eventual pension pot by a significant amount in the long term. Although you should be aware that in Spain it is common for pension products to contain high, often hidden fees, which facilitate large commissions to the adviser. Ensure you work with an adviser who guarantees they will disclose all fees and commissions.
5. Easier to track and switch
It can be easier to track and switch your investments if they’re in one place. Modern pensions allow you to look online to see where your pension fund is invested and how it’s performing. You can follow your progress and use online tools to see if you’re on the right track for a comfortable retirement.
But don’t dive in without looking first
As you can see, there can be several advantages to consolidating your pensions, depending on your circumstances. However, it’s important to be aware that transferring pensions isn’t right for everyone, and there’s no guarantee that you’ll be better off by doing so.
Before transferring, it’s important to check your current pensions to make sure you won’t miss out on any valuable benefits or guarantees as a result – and to check you won’t incur any excessive exit fees. An adviser at Chorus Financial will be able to help you with all this.