Omnium Employee Benefits

The pros and cons of consolidating your pensions

Many people move jobs throughout their working lives and, as a result, can accumulate multiple pensions. These separate pots of money can be easy to forget and even more difficult to maintain and monitor with the passage of time.

One obvious option is to consolidate these pockets of money into one combined pension, but, while it may make it easier to keep track of your money and where it is invested, this approach may not suit everyone. For example, if you are fortunate enough to be in a final salary scheme, in many cases it may make sense to leave your money where it is. On the other hand, if you are not in a defined benefit scheme, it could well be worthwhile to consolidate. The best solution will always depend on individual circumstances, with the main problem being where to start.

Tracking down lost pensions

Research from Aegon estimates that one in five people have lost track of a pension pot, explaining why there is more than £400m languishing in unclaimed pensions. The problem prompted the Department for Work and Pensions to set up a free Pension Tracing Service website in 2016: www.findpensincontacts.service.gov.uk . You can also make contact by telephone: 0845 600 2537. The database contains details of more than 320,000 workplace and personal pension schemes against which your enquiry will be matched.

You will need the name of your former employer or pension provider, plus your National Insurance number and the dates you started and stopped work. The service will provide you with the details to get started – not the value of the pension.

Armed with all the details, you can then decide whether it is worthwhile consolidating your pensions into one pot.

Drawbacks

Consolidation will obviously make it easier to monitor your pension, but there may be drawbacks. For example, in making life easier you may forfeit some important benefits and guarantees, such as transferring from a workplace pension scheme resulting in losing employer contributions.

You may also face heavy penalties or fees for moving your pensions from one scheme into another.

Consolidate or not?

The decision is not always straightforward and advice should always be sought before carefully considering your options.

Get in touch

If you need advice on your pension arrangements, talk to one of our pension experts on 01483 205890

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