It is becoming more common for people to have multiple jobs with different employers throughout their lifetime, rather than one long career with the same company, which means that most people have multiple pensions ticking away in the background. For some people, this will not be a problem to them and they may decide against pension consolidation, however, for others, the idea of streamlining their pension planning in preparation for retirement may appear to be a more appealing and beneficial route. Within this piece, we cover why you should consider consolidating your pensions and areas you may need to be aware of when approaching the task of pension planning.
The ‘ins-and-outs’ of pension consolidation
Pension consolidation is when you combine two or more of your own existing pensions, either from previous employers or personal pensions you may have set up yourself, and move all the funds into one manageable pot. The task of pension consolidation can often seem daunting, with various pensions having different benefits, guarantees, exit penalties and fees and this is why we highly recommend speaking to one of our experienced Financial Advisers who will help with the process from start to finish.
Pension consolidation scams
Unfortunately, where there is money involved, there are always going to be fraudsters looking to cash in and sadly, there are companies out there who will try to scam vulnerable people out of their money. That is why it is crucial to do your research on your chosen Financial Adviser to make sure you feel confident that you are in safe and knowledgeable hands.
The Pensions Regulator has created an article all about scams, how to spot them and how to report them. The FCA also provides some insight into being ‘scam-smart’. We would always recommend looking up your chosen Financial Adviser on the Financial Conduct Authority (FCA) register. You can find us there by searching “Deep Blue Financial Limited” or looking us up by our FCA number “190203”.
The benefits of consolidating pensions
There can be multiple benefits of pension consolidation. Three of the primary benefits are:
Ease of plan management
For some, admin-type tasks may be mundane, monotonous and, in some cases, confusing, so having only a single plan to manage would be ideal, as it would likely reduce the amount of paperwork and statements you receive. In turn, this would mean you would spend less time on those dreaded admin tasks and have more time to enjoy life. With only a single pension pot, all the information you need would be in one place. On top of this, if you chose to use an Adviser at Deep Blue Financial, we would be able to act on your behalf in regard to your pension, meaning an even easier job for you as your pension is being monitored and reviewed by a truly independent and unbiased professional.
Potential for Lower charges
All pension plans across the market come with charges, but the size, nature, and stipulations for these vary from provider to provider. This means that it is likely that you are paying a fee to each pension provider you currently have a plan with, which, if your plan has high charges and poor fund performance over time can eat into your savings. By combining your pensions into one pot, you could significantly reduce how much you pay in provider charges, especially if the new plan uses a tiered charging structure, in which, the larger the fund, the lower the charges.
A single payment instead of multiple small payments
By having multiple pensions, you face receiving lots of smaller payments on dates you have specified to each individual pension provider. This can get confusing when it comes to managing your finances and ensuring there is enough money in your account to meet your financial commitments. By consolidating your pension pots into one policy, it is easy to keep track of the one payment entering your bank account on the date you have set. It also means you have a single point of contact should there be any queries about your payment.
With our help, here at Deep Blue, we will analyse the risk and weigh this up against the benefits, to provide a solution that is specific to your situation and needs, and always in your best interest. Pension consolidation can be complex and we would always recommend speaking to one of our Financial Advisers before making any decisions or choosing to consolidate your pensions on your own. Having a Financial Adviser to help lighten the burden on your shoulders will hopefully reduce the stress and risk of complications you may face if you were to do it alone and most importantly, give you peace of mind.
How do I get started with pension consolidation?
Initially, you’re able to get in contact with us in many ways. This can be done by calling us on 01329 233364, if you are nearby to our Head Office in Fareham you could pop in and see us at our office, or you could enquire through the contact form on this website. A lot of our clients also come via a recommendation or referral from a friend/colleague/family member.
Once initial contact has been made, your details will be passed on to the Deep Blue Financial Adviser who is closest to your geographical area. The Adviser will give you a call to gather an understanding of what it is you are looking for, and then make an appointment to visit you at your home, meet with you at our Head Office in Fareham, meet in a convenient public place or schedule a video call.
The initial meeting will be an opportunity for our Adviser to gather as much information and details from you as possible and get a greater understanding of your situation, what policies you have and what you are hoping to achieve. This initial meeting is at no cost to you and there is no obligation to continue.
At this meeting, your Adviser will ask you to sign a Letter of Authority (LOA) which is a document that allows us to speak to providers on your behalf and request information. These will be sent off by our back-office team to your pension providers, requesting details on your policy(s), so that we can gather all the information required to make a recommendation for consolidation if this is in your best interest. This part of the process can often take some time while we wait for a response from each pension provider.
Occasionally, pensions do have exit penalties – if you aren’t already aware of these, we will get these details when the provider sends back the information we requested. From there, we will be able to provide the most accurate advice. It’s also worth mentioning that some pensions hold guarantees and moving the monies away could mean losing these – again, we would find this out when the provider sends back the pension information.
At Deep Blue Financial, we pride ourselves in being able to say hand-on-heart that we only ever recommend pension consolidation if it is in our client’s best interest. To come to the decision on whether pension consolidation will be beneficial, we will assess your situation, both ask and answer questions and produce a recommendation tailored to your needs and circumstances. If this is a matter in which you feel you would benefit from expert advice and would like us to help investigate your possibilities, do feel free to get in touch.
