Two Pensions: Old v New Employer

kingaliababa

I left Company 1 and had a minimal pension fund with them.
I opted to keep this pension separate from my new employer pension scheme (Company 2). I adopted an Adventurous Investment strategy with Company 1 pension while my Company 2 pension is in a low-risk scheme.

As a result, I have seen some significant growth from £14k when I left Company 1 in 2014, to £20k three years later with no additional contributions. I am happy with how this is working out so far.

However, while I potentially want to keep this strategy for another few years, I am looking into the options for my Company 1 pension. I am quite uneducated in how pensions work in all honesty, so am enquiring if it is possible to transfer the sum of my Company 1 pension into my Company 2 pension.

What are the pros and cons of doing such?
I don’t see the long-term benefit of keeping them separate, as Company 1 is only predicting a £650-830/year entitlement on its current growth.

Many thanks.

Linton

It may well be possible, it depends mainly on the scheme you want to transfer into. Ask your new employer's pension person. Just like with ISAs, it's the tranferring in pension that makes all the arrangements.

Dont make a decision based on the predicted pension. Two reasons:

a) the performance mainly depends on the funds you are invested in, not the pension used to access those funds. However the pension is likely to limit your access to a small choice of funds.

b) the "prediction" is purely a mathematical exercise based on assumptions. It is an example, not a prediction.

Another factor to consider apart from choice of funds is charges. Some employers subsidise the charges for existing staff but not for people who have left.

kingaliababa

Thanks for the reply.
I'm aware of those two points you raise, thank you, I was more asking if it's actually worth transferring into one and if there are tangible benefits (or not as the case may be).


I understand this is a generic query so not really providing you with much to go on but, as I say, my pension knowledge is limited.

AnotherJoe

Personally I think it’s best to have two. Keeps it more flexible.

If you move jobs , move ‘pension 2’ into pension 1 and you’ll also have pension 3, new employers, running.

So you'll always have ‘Pension 1’ which contains all previous pensions, and one with current employer.

This assumes all of these are standard money contribution pensions and not government type pensions which you should leave alone, or pensions which provide benefits related to final salary, very unusual these days.

PeacefulWaters

Comparing the charges would be a start.

Can you invest in a similar adventurous fund for less cost in the newer scheme?