Shall I merge my pensions 30 July 2020 at 4:09PM in Pensions, Annuities & Retirement Planning 11 replies 513 views

LaBob

Hi - please help!  I have 2 Scot Widows pensions - an old work one which converted to a personal pension when I left my last employer and a new work one which I was auto-enrolled onto by my current employer.   I am only contributing into the current work one.  Should I merge these together or leave as they are?  Are there any financial benefits or disadvantages to merging or leaving?  I called Scottish Widows and was told they could not advise.  They just said there is no fee to merge.  What should I do?!

Albermarle

 To work out what to do first you need to be clear on the charges you are paying for each one and whether there might be any discounts for having a larger amount with one of them .
Then look at how your money is invested in each one and maybe compare how they are performing . 
Whether you have one pension or ten , the choice of how the money is invested is the most important point.
Maybe one pension has more choice of funds than the other .
Sometimes older pensions do not support all options when you come to take the pension

xylophone

https://www.thisismoney.co.uk/money/pensions/article-4644230/Is-worth-combining-pensions-one.html
May be of interest.

Another point to consider, if a pension will be a "small pot"  (£10,000 or under) it  might be worth leaving it as is on the basis that it could be taken (if required) without triggering the MPAA.
https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/money-purchase-annual-allowance-mpaa/#:~:text=Small%20Pots%20or%20defined%20benefits%20triviality%20payment&text=This%20is%20paid%2025%25%20tax,does%20not%20trigger%20the%20MPAA.

dunstonh

Should I merge these together or leave as they are?

Or move it to another as a potential third option.    

Are there any financial benefits or disadvantages to merging or leaving?

There can be advantages and disadvantages depending on the pensions you have and what you compare them to.   They are not all the same.  So, an analysis of them needs to be done.

I called Scottish Widows and was told they could not advise. 

Very few product providers have the regulatory authorisations to give advice.   So, they cannot give advice or opinion.   They are not being difficult.  It is just not their remit.  They leave advice to advisers.

You need either analyse them yourself and compare options or get an adviser to do it for you.  An adviser will cost money but sometimes, especially with older pensions, that cost is quickly recovered by using modern low cost products.    Alternatively, you can learn about it and do it yourself.

Albermarle

You need either analyse them yourself and compare options or get an adviser to do it for you.  An adviser will cost money but sometimes, especially with older pensions, that cost is quickly recovered by using modern low cost products.    Alternatively, you can learn about it and do it yourself.

Which way to go also partly depends on the value of the pensions , which has not been mentioned so far . If the combined value is not that high then an IFA may be disproportionately expensive and/or they are not interested.

Also you will have to most likely keep your current workplace pension to gain from employer contributions.

LaBob

Thank you for your help.  I am unable to analyse as I have no idea what I am looking for.  I did contact an IFA who advised me to merge these and another pension I have but in his report he gave the reason as "to reduce the administration burden of have three pensions to manage" which I had never mentioned to him.  There is no administration burden as there is nothing i need to do.  My reason is to gain the best financial benefit and not miss an opportunity to gain a better return.  Plus there was a fee which I had been advised there would not be.  So I came on here to get a second opinion.  My older SW pension value is around £25k and my newer one is £5k so neither of these are huge.  My older Pru pension is a higher amount and I am leaving that one alone.
What do you think, forum?

Albermarle

No IFA is going to be interested in pensions of that size , Could be an idea to post what the two pensions are actually invested in and you might get some better guidance.

AnotherJoe

dunstonh said:

Should I merge these together or leave as they are?

Or move it to another as a potential third option.   

Almost certainly not feasible since one of them is their current employers scheme

AnotherJoe

LaBob said:

Thank you for your help.  I am unable to analyse as I have no idea what I am looking for.  I did contact an IFA who advised me to merge these and another pension I have but in his report he gave the reason as "to reduce the administration burden of have three pensions to manage" which I had never mentioned to him.  There is no administration burden as there is nothing i need to do.  My reason is to gain the best financial benefit and not miss an opportunity to gain a better return.  Plus there was a fee which I had been advised there would not be.  So I came on here to get a second opinion.  My older SW pension value is around £25k and my newer one is £5k so neither of these are huge.  My older Pru pension is a higher amount and I am leaving that one alone.
What do you think, forum?

There are several things you may wish / should / may need to do.

Keep them updated on changes of personal circumstances. Address for example, expression of wishes form.

Adjust the investments in them. <<<<<< This is important. If you are in poor investments then that will damage your wealth much more than high fees for example.

More details needed on what they are invested in, what fees there are, what guarantees there are (the Pru one may well have guarantees)

dunstonh

AnotherJoe said:

dunstonh said:

Should I merge these together or leave as they are?

Or move it to another as a potential third option.   

Almost certainly not feasible since one of them is their current employers scheme

Not necessarily.  Quite a lot of people retain an individual pension in addition to a workplace one.   Then each time they change employers, they transfer the inactive workplace pension to their individual one.

No IFA is going to be interested in pensions of that size 

Not necessarily.   On a transactional basis, it is a relatively quick transaction for an IFA and they can probably lower the charges if the plans are old ones.  Making it easy all round.     Whilst many wont be interested, some will.

I did contact an IFA who advised me to merge these and another pension I have but in his report he gave the reason as "to reduce the administration burden of have three pensions to manage" which I had never mentioned to him.  

Interim comparison reports can give the adviser a couple of options to select that best fit the objective.  These are not normally personalised as that doesn't happen until the adviser writes their suitability report.    You don't normally get the suitability report until you commit to paying the fee.

Plus there was a fee which I had been advised there would not be. 

Who advised you that there wouldnt be a fee?

How do you expect the adviser to be paid if there is no fee?

What do you think, forum?

Insufficient information to go on.   Until the analysis of the plans is carried out, nobody can say.   What did the IFA say?

xylophone

Have you looked at the charges on the old SW pension? Does it have a Guaranteed Annuity Rate?
If there is no  favourable GAR and the charges compare  to your advantage with those on the workplace pension, it might be worth transferring one into the other for ease of administration?
or would it be worth transferring the old SW into the Prudential pension as you seem happy with the Pru's performance/fee structure etc?