combining pensions-what do I need to know

R.j.Belcher

Hi I have 5 pension pots-plus a active workplace pension. The largest is £50k( contracted out of SERPS) and the others add up to £30k. I am now 50 and want to start planning ahead and combine these so I can cash them in in about 12 years. I did get a company to look into this about 10 years ago and they said they could not do this but didn't tell me why. What should I be looking for in my policys that might point to this and any issues it may bring up as I have no clue where to start. Would like to do as much work as I can before I go to a IFA.
thanks
Rob

Albermarle

If they are all standard DC schemes , it is easy to transfer them/combine them .
If they have any kind of guarantee or they are a DB/final salary scheme then it can be more complicated . However due to the relatively low values it should not be a big issue.
The first thing to do is to check each one and see what the charges are . This includes your current workplace pension . Although this will have to be kept open , it could also be the best place to combine everything.
The fact that one of the pensions was originally SERPS related does not matter , it is just another pension pot now .

OldMusicGuy

Like Albermarle said, if they are all defined contribution schemes then you can combine them probably at no cost. No need to involve an IFA unless there are special benefits or conditions (like a DC scheme with a defined benefit underpin). An IFA will cost you money which you may not need to spend.

First thing to do is to read up a bit on pensions so you know the difference between the basic types (DC vs DB) and how any guarantees/benefits on DC pensions might affect the ease of transfer. The Pensions Advosory Service is a good place to start: https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics .

This website also has a good section on what things you need to think about if you do plan to combine pensions. You don't "cash pensions in" so you might want to do a bit more reading about how pensions work before deciding on your course of action. You don't have to combine pensions to take benefits from them, and combining them doesn't necessarily mean they will do any better - that all depends on the investment choices you make when they are combined.

However, if you do combine them it will make things easier to administer and you might be able to reduce the costs of running the pensions.

If you need to do a bit of reading about how pensions work, this book is a really good place to start: "DIY Pensions: A Simple Guide to Pensions, SIPPs & Retirement Planning" by John Edwards.

SonOf

I did get a company to look into this about 10 years ago and they said they could not do this but didn't tell me why.

Cost?
If it was a bit over 10 years, then maybe the protected rights (changed in 2006)

What should I be looking for in my policys that might point to this and any issues it may bring up as I have no clue where to start.

Safeguarded benefits
cost
investment selection

R.j.Belcher

Thanks for the pointers, they are simple DC schemes as far as I know. I just feel it is pointless paying 5 lots of fees each year, particually as one is just £3k.I will look at the Pensions advisory service and will be talking to Pension Wise.

Brynsam

OldMusicGuy wrote: »

LYou don't "cash pensions in" so you might want to do a bit more reading about how pensions work before deciding on your course of action.

You can if they are 'small pots' - and that certainly seems to be the case here, save for the pot worth £50K. OP, have a read of this: https://www.royallondon.com/media/press-releases/2019/august/five-good-reasons-to-think-twice-before-consolidating-your-pension-pots/

Bear in mind that most (reasonably) modern pension contracts are based on a %age of the funds invested, so whether you pay 5 lots of smaller fees, or 1 larger one, may not have as much impact as you believe.