Consolidating Pensions?

glynnadams

Hi there
I'm using lockdown/unemployment as a chance to do some life admin and check over my finances. Turns out I have 3 different (rather small) pension pots with different providers (consequences of a more freelance style job). Should I consolidate them and if so, how do I go about choosing which is the best to transfer to? The pensions are with Aviva, Aeegon and Old Mutual (the latter is a personal pension and the first two were from previous employers - they all have rather small amounts of money in them). I'm 45, currently between jobs but have all my full state pension credits. Many thanks for the advice! Di

Linton

In general there is no strong reason to consolidate small pensions, nor a strong reason not to.  It's more a matter  of convenience.  If you dont consolidate now you may well wish to do so when you retire.

If you wish to consolidate it obviously makes sense to do it into the best option.  "Best" could be lowest charges, range of investment fund options or the avilability of online access.  It all depends on what factors are most important for you.  It could be one of your existing pensions but you may find that old employer pensions wont accept a transfer-in.  Another option is to set up a new flexible pension such as a SIPP for the purpose.

Before transferring you should check whetherthe pensions have any special provisions such as a guaranteed annuity rate, early retirement date etc etc.  I would guess that in your case, given your age, they wont since such benefits were more common in the 1980's.

Albermarle

Often ex employer pensions have lower charges/discounts than one you have set up yourself, although it is not usually that obvious from the paperwork. Also checking the charges can be a bit confusing anyway . Some have a pension/platform/admin % charge then the investment fund(s) have their own charge.
Some have one all in charge .
Often you end up phoning the pension company to be sure . Problem is they are not that easy to contact at the moment .

digbydog

I doing the same at the moment although I'm further along in life's journey than you. I'm also trying to find the relative cost and benefits of different pensions and I have not found it simple to work out. What I have found is that a seemingly small percentage of differences in costs can multiple over many years into substantial amounts of money. In the past, I have avoided transferring pensions into one pot but looking back that may have been a mistake.

euanlowe

Hello, I am currently transferring my defined contribution pension from Aviva to the Vanguard SIPP. Despite the problems, I can attest that it is relatively simple from your viewpoint, all you need is the name of the firm holding the pension (precise business name e.g. Aviva life and pensions UK) and the account number, and they should be able to do the leg work for you over a month or two.

Now before you get to the decision of where to shift it, you obviously you have the options of not consolidating, and of moving them all the same provider. These decisions should be based on the platform costs, plan benefits and how much you like them.

If you decide to switch, I would argue there are three buckets to imagine (1) low cost platform, (2) high cost platform and (3) financial advisor.

Vanguard is a low cost, not many investment options type of platform. Something like Hargreaves Lansdowne is a more expensive platform, but you have huge choice and most people seem to rave about the customer services. I have a friend on interactive investor, and its very cheap for a decent sized pension pot - with a good selection of investments - however I put it in the low cost bucket because some do complain about their customer services.

Finally there's also the financial advisor route. This is about the most expensive way to go, but they have some tricks up their sleeve to add value to your pension plan, for example around tax planning and tax benefits. So how to choose between these options? Think about how much hand holding you need, do you want to speak to someone occasionally? Are you going to change investments regularly or will you basically put it into one thing and just leave it there until you retire? Do you want to invest in funds or in shares? It is complicated but now's certainly a good time to figure it out!

Albermarle

I wouldn't totally dismiss the traditional pension providers , like Aviva, Standard Life, Royal London etc .
Especially if they are ex workplace pensions they can have some big discounts on the standard charges .
Plus with these providers you have 100% FCSC cover , not limited to £85K . Although the chance of a mainstream SIPP provider going bust is very remote.