Two personal pension plans

JayZed

I have two personal pension plans, one with Scottish Widows that I took out with my old employer, into which I no longer make any payments; the other with Standard Life with my current employer, into which I (and my employer) make monthly payments. The SW one doesn't have very much in it.

My question is whether there's any advantage or disadvantage to having two separate PPPs, or whether I should transfer the SW one into the SL one (which I assume it's possible to do?). I have no preference either way, just wondered if there are reasons that I should or shouldn't do this.

dunstonh

When it comes to buying an annuity, a single source gets you a better rate than multiple sources. Although you can delay that decision until then (by doing a transfer with immediate commencement rather than open market option).

What is best will depend on what versions of the pension you have, what guarantees exist, if any, and how these compare with modern options and the SL pension.

JayZed

Thanks dunston (I knew it would be you who answered this!). So it doesn't make any difference (other than the relative performance of the investments) whether I do it now or in 25 years' time?

Can you explain what you mean by "modern options"?

dunstonh

So it doesn't make any difference (other than the relative performance of the investments) whether I do it now or in 25 years' time?

Nope. Only difference now is the investment choice and charges. Neither SL or SW offer fund based discounts so there is no benefit from having a single higher fund other than perhaps convenience.

Can you explain what you mean by "modern options"?

Pensions have changed a lot in recent times. It started in 2001 but after April 2006 there were more changes. There are a lot of new style personal pensions that are cheaper and offer better investment choice out there now than there was just a few years ago, let along 7 years ago or more.

A lot of works schemes havent kept up with the changes I'm afraid and its very common to find only a handful of funds available. Often its worth having a second pot with more investment choice running along side the works scheme. However, if the works scheme does offer good investment choice then you are one of the lucky ones.

Legacy schemes (I tend to think of them as pre 2001 schemes but basically its any pension scheme that is no longer available for new business) often dont get updated but get replaced. So, it is important for anyone with an old pension to check it periodically to make sure it is still the best option. A know its a cliche but pension planning does need that periodic health check if you want to get the best out of it.