Pension consolidation is the process of combining multiple pension pots or schemes into a single scheme. This is a feasible option for individuals who have worked for more than one employer throughout their career. In most cases, you can combine multiple pensions; however, older workplace schemes or defined pension schemes might have restrictions that will prevent you from making the transfer.
Do you need help consolidating or transferring your pension? Get in touch with professionals for pension advice in Oxfordshire.
What are the benefits of pension consolidations?
Less paperwork
When all pension schemes are combined, it means less paperwork for you. Once you’ve consolidated your pension, you will no longer have to deal with multiple statements. Keeping track of the pension income will become easier. Along with the pension schemes, all the statements are also consolidated. This makes it easier to keep track of the wealth.
Easy pension allowances
Record-keeping becomes easy, which makes the pension allowances easy as well. If you plan to make a large one-off contribution using a carry-forward amount, combined pension allowances make it easier. This is determined based on the previous year’s annual allowance amount. This calculation can get messy if you have more than one pension allowance under your belt.
Easy withdrawal process
If you plan to make income from pensions, consolidating them makes sense. This will give you a more streamlined approach. You can easily get income from pensions, which will act as flexible payments.
Choice for investment diversification
Many people think that transferring investments to a single pension provider will reduce the diversity of investments and impact their money. However, the case is reversed. By consolidating the pensions, you can have a good investment choice. The money will be professionally managed by an investment team, which will also help to improve risk-adjusted returns.
What should you consider before consolidating your pensions?
If you’re thinking of consolidating your pension, there are a few things that you should consider. What are the possibilities of exit penalties? Many pension schemes can be transferred without a penalty. Again, there are others where high exit charges are imposed. However, these charges vary depending on the person’s age. Hence, before you plan for a consolidation, check out the costs involved for the exit charges.
Another major point of consideration is the service and support offered by the new provider. Pension management is a long-term commitment. Hence, before consolidating, get an idea about the customer service process, user-friendly online tools, and communication channels that the new provider uses. These factors can make a huge difference and will change the way you benefit from consolidation.
What should be your final decision?
Before you decide to consolidate the pension, contact professionals for pension advice and decide accordingly. Hire professionals from Money Principles. We can help you save time and avoid expensive mistakes. If you have multiple pension schemes, you can combine them with our help.
