Should I combine my pensions?

dnevets

I have a small civil service pension (only worked there for 2 years) which is a defined benefits scheme.

Then I changed jobs and had a stakeholder pension, where I paid 4% and the company added another 7%. I worked there for 4 years.

I then worked abroad for a few years (no pension payments) and upon returning to the UK I now have a job at a company that doesn't have a pension scheme.

So I plan to take matters into my own hands by setting up my own pension with Cavendish Online, who I understand offer a good service with reduced charges.

To simplify things I'm considering putting everything together; transferring my 2 old pensions to Cavendish and then start making monthly payments into this single, main pension fund.

I suppose my question is.... Is this a sensible idea? Can anyone help me out with a brief list of the pros and cons of doing this?
In case it makes a difference, I'm 33 and married.

jem16

dnevets wrote: »

I suppose my question is.... Is this a sensible idea?

No it is likely to be a very bad idea to transfer a defined benefit pension to a defined contribution pension. You will also not be able to do so without it being signed off by an IFA .

The Stakeholder pension transfer is a different matter and it would simply be a matter of comparing charges and investment funds.

CannySaver_2

Hi

I'd agree with Jem.

Transfering a defined benefit scheme, which has a guaranteed income in retirement, which will rise each year between now and retirement and then again after retirement, is generally a very bad idea and one which will generally leave you worse off.

By all means combine any defined contribution schemes you have but leave the defined benefit scheme alone and untouched, it might be small but it's perfectly formed!

The Canny Saver

Frozen_up_north

I receive two pensions and find dealing with separate pensions to be very easy.

One pension is from a multi-national company and the other from a local government pension scheme, both are final salary schemes and both increased by around 5% recently. I pay a small amount of tax on one pension and the other pension is fully taxed. Both are taxed at source by the PAYE scheme and involved little in the way of paperwork with the tax office.

I would carefully consider the future viability of your pensions and not combine them unless it is to a more robust provider. Some providers will not offer a 100% transfer value. Also pensions, where your pot of money is used to buy an annuity are not looking good at the moment.

Loughton_Monkey

Don't even consider transferring your CS pension. It's the worse thing you can do, which explains why no pension company would accept it.

As for the other two, by all means be 'tidy' if you want. I wouldn't mind betting that your stakeholder charges are lower than Cavendish, but you need to check. If so, then provided the stakeholder offers funds that you consider viable as part of your portfolio, then keep it open just for that (those) fund(s).

These days, transferring one pension to another usually involves no costs. Personally, I have 5 different pension funds, and I don't see that as a problem.