BY JOHN ELLIS, FINANCIAL ADVISOR
KEEPING on top of pensions from past employment can feel like a monumental task.
Several pension pots, each managed separately through a different employer, trustee, or pension provider, can make it very difficult to arrive at a single figure of how much you have put aside and its estimated value at retirement.
Without these figures it is impossible to know what pension you can expect in retirement.
Research shows the average person can have up to 10 different jobs over the course of their working lives, so the likelihood is they will have built up several different pensions of varying amounts.
If you are to understand your overall financial position is vital to have an overview of these pension.
Getting to that place isn’t always straightforward. People move house and forget to tell their pension provider.
Former employers go out of business or companies’ merge.
Even pension providers themselves change hands or transfer blocks of clients to other providers.
So, make sure you are getting annual statements for all your pensions and keep them together in a safe place! Many people put them aside with the intention of reviewing them when they have more time, but invariably time passes, and they lose track.
For some, it may be sufficient to keep on top of the annual statements by adding up the value of various plans, but others with a more complex history will need to consider organising their pensions by combining older plans together with one provider.
A Financial Broker will source your old pensions and bring them together into a single pot, which can then be used for future savings.
For investors with a combination of personal pensions and defined contribution schemes, consolidation has advantages, including saving money in fees and ensure you get the retirement options you need.
Another option is to transfer older pots into your present employer’s pension. Like consolidation, this keeps everything in one place. However, be aware, some employer-based schemes will not accept transfers in.
And be very careful as many old personal pension plans, defined benefits schemes and traditional with profit plans can have very valuable guaranteed annuity rates or may have hidden early encashment or transfer fees.
Before deciding you need to consider whether the fees or early encashment penalty you will pay to transfer to a new contract are reasonable in comparison to any pension schemes you are proposing to leave.
Therefore, all investors should take independent advice from a Financial Broker and whatever you opt to do it is imperative to get a complete picture of retirement finances, realising that decisions based on incomplete information is a high-risk strategy.
And the closer you get to retirement, the more important it is to have a clear picture of how much money you will have to work with to provide for the rest of your life.