Should I merge pensions?

lcfcstephen

Hi,
I recently changed job and so I now have started a workplace pension with Royal London with my new company. Royal London has a 0.9% Annual Charge (though this will reduce to 0.5% once £35k is held). I have a decent chunk of a pension with Peoples Pension (around £20k), this has an annual charge of 0.5%. I am in my mid 20s, and neither of these pensions are final salary, they're both auto enrolled pensions. Is there any reason that I shouldn't merge these pensions together? Whilst the management charge on peoples pension is lower, having two pensions with annual charges is surely worse than one? 
Thank you

dunstonh

I recently changed job and so I now have started a workplace pension with Royal London with my new company. Royal London has a 0.9% Annual Charge

Are you sure it is 0.9%?  Auto enrolment schemes have a 0.75% cap on the default fund(s).   For insurers like RL, that usually means any of their own in-house funds.    So, 0.9% doesn't fit with that unless you have selected an externally managed fund.

r, having two pensions with annual charges is surely worse than one? 

No.     If you have 10 pensions all charging 1% p.a. then it costs exactly the same as one pension charging 1% pa.

Linton

The only reason why one definitely should not move a pension is if the pension is linked to some special guarantees - eg annuity rates or annual increase.  However since such benefits have not been available for perhaps 20 years or more this wont apply in your case.

So there is no strong reason not to move.  On the other hand there may well be no great benefit in moving.  It is likely you can move your old pension to your new one since your new employer will be motivated to help you but often you cannot merge into old employer's pensions - since you arent employed by them why should they do the work.

One benefit of merging may be that the new one has lower charges, but since charges are normally caculated as a % of the pot merging two similarly charged pensions wont make any difference.  Another benefit is if the new pension has a better choice of funds.  The third benefit is just to reduce the paperwork.  You may well want to do this before you retire, but that is a long way off.

Albermarle

It is likely you can move your old pension to your new one since your new employer will be motivated to help you but often you cannot merge into old employer's pensions - since you arent employed by them why should they do the work.

Normally nowadays when you leave an employer with a DC pension , it just comes with you and your ex employer is not involved anymore . So it is basically your personal pension and you have direct contact with the provider. You can do what you want with it . Transfer it out ; transfer into it ; add new contributions to it ; change the funds within it etc .

Only issue usually is that the new employer will only make contributions into the pension they offer.