Should my husband merge his pensions?

teapackets

Hello, would anyone be able to tell me if there's any benefit to my husband putting all his pensions into one? Can he even do this?

He has a private one he's been paying in to for about 20 years, then he has three more from various employers that he no longer pays into and are just sitting there with a couple of thousand in.

Many thanks

Daniel_Elkington

Yes and No (typical IFA answer)

If he wants to put them all in one place the hard part is finding a pension that would work with him.

There may be problems when it comes to paying out with old group schemes as the admin is usually inadequate or at the least, incredibly slow.

If he does it himself then he should find a contract that has no initial charges and no cancellation penalties, there are a number of providers who do this.

www.moneyadviceservice.org.uk has a comparison tool on it which can help in this regard.

He should FIRST look at the benefits within his existing schemes. If he has any guaranteed annuity rates or guaranteed income bases then it is very unlikely that transferring would be worthwhile.

Consolidation alone is not a good reason to transfer a pension as there may be benefits he could be losing out on.

Sorry that my answer isn't terribly clear however there are lots of factors to consider in this arena that I haven't put here. Thats the main reason a standard pension transfer suitability letter from an IFA will be about 12-18 a4 pages long!

teapackets

I'm going to make a cup of tea then sit and read your reply a bit slower !!!!!

Thank you, and thanks for the link.

Daniel_Elkington

make me one too please, I've got manflu!

teapackets

I'm on my second day off work with bad back ... ensconced in the conservatory with special pillow, laptop and a list of things I have meant to do for months!!! :T

fred7777

Don't merge them for three reasons:

1. There is no problem having pension income paid by several pensions.
2. The replacement 1 pension will probably only pay as much as the several put together.
3. After Maxwell, Equitable life, Kaupthing, Northern Rock, Annuity miss-selling etc etc etc there is a lot to be said for having your eggs in more than one basket.

Daniel_Elkington

1. Agreed, if and when annuitising (creating income from pension), you take an open market option and all the income will come from one place anyway. Consolidation alone is not a valid justification for transferring a pension but I said that already.

2. Wrong. If you have old GPP's you could be paying 1.5% AMC or more for effectively a tracker, by combining them you get a large fund discount and can save more. Additionally, most tracker style pensions are charging 0.5% or less. if that is the case saving 1% a year is definitely worthwhile.

3. Wrong,

Kaupthing was lending and using the debt as the deposit, the collapse of Kaupthing only affected personal pensions as much as it affected the markets, which is where PPP's are invested.

Robert Maxwell stole money from his company's occupational scheme, as a trustee of that scheme and the sponsoring employer he had access, this is a personal pension. Additionally that was pre-regulation.

Equitable life was offering stupid guaranteed rates they couldn't afford and didn't pay commission so no adviser would touch them. This was pre-SolvencyII

Northern Rock got hit by a run on the banks, like in Mary Poppins. You won't get a run on pensions in the same way as life companies are not allowed to lend out your benefits to other people. Again this was pre solvency II.

Annuitising comes later on in life and is circumstancial and not relevant to planning for retirement.

Your pension 'fund' is usually diversified by investing in other companies or assets. There are rules on diversification to ensure these funds are not going to be affected by the collapse of a single institution.

I'm sorry but two of those arguments are completely wrong and inappropriate.

I could understand 'don't bother because it's difficult and advisers are expensive', but the load of trite you've trotted out isn't helpful.

dunstonh

Annuity miss-selling etc

I must have missed this one. When did that happen?