Should I combine my pensions?
Many people have multiple pensions from a series of employers and keeping track of them all can be a headache. Whether to combine them or not depends on a variety of elements:
- Where are your pension funds at the moment?
- What are the charges?
- How flexible are the contracts?
- What are the reasons for combining them?
Although clients often think that there is a need to ‘tidy up’ their pensions, realistically there may be no harm in leaving them where they are – if they are competitively charged and offer sufficient flexibility, what realistically are the benefits to transferring?
We tend to find that most pension schemes are quite competitively charged. Some older-style contracts, set up in the mid 1980s, might have higher-than-average charges, but these contracts can have very attractive terms and guarantees, which would be lost on transfer.
An independent adviser can carry out a proper analysis of the funds and examine the terms and conditions to help you weigh up the pros and cons of transferring. You should be wary of advisers who charge fees based on the amount transferred when you combine your funds; they may not be working in your best interests.