Merge pensions? or keep seperate?

x_raphael_xx

Looking for advice on what info I would need to make an informed decision.

So we recently had a change in ownership at my place of work. So I have a pension under the old closed company (A), and a pension under the new company (B).
Both are held with the same people (creative pensions)

In my basic knowledge of pensions, I understand that I am charged fees, for the pension management & wotnot.
My idea was to take pot A and add it to pot B, as there are no longer any payments into A, and therefore would be eventually worn away by the fees. Pot B would get a nice injection, and I would get more interest on this bigger pot.
I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something, I don't really understand it.

How do I work out the best course of action? What info do I need to dig out?

Thankees in advance

Albermarle

A pension is only a administrative tax wrapper. Your money is in investments within the pension.
So much more important than merging or not merging pension providers , is that the investments within the pension are suitable for your personal circumstances ( how old you are etc )

as there are no longer any payments into A, and therefore would be eventually worn away by the fees

The fact there are no ongoing payments is not that relevant. Your money is in investments within the pension, which hopefully will continue to grow in the long term. The fees are small beer compared to the investment performance.

Pot B would get a nice injection, and I would get more interest on this bigger pot.

Pot B would be bigger, but no guarantee that the investments in Pot B, will perform better than the ones in Pot A. Size is not everything as they say.

I guess you get the drift now that you need to be looking into the investments within the pensions( on line access is usual nowadays) and learn a little bit about investing for retirement , before doing anything else.

Marcon

x_raphael_xx said:

Looking for advice on what info I would need to make an informed decision.

So we recently had a change in ownership at my place of work. So I have a pension under the old closed company (A), and a pension under the new company (B).
Both are held with the same people (creative pensions)

In my basic knowledge of pensions, I understand that I am charged fees, for the pension management & wotnot.
My idea was to take pot A and add it to pot B, as there are no longer any payments into A, and therefore would be eventually worn away by the fees. Pot B would get a nice injection, and I would get more interest on this bigger pot.
I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something, I don't really understand it.

How do I work out the best course of action? What info do I need to dig out?

Thankees in advance

It's not like a deposit account, where the more you have saved, the higher the rate of interest. Why? Because you aren't invested in the same type(s) of fund(s) as a building society or bank deposit account.

This article may be helpful: https://www.thisismoney.co.uk/money/pensions/article-3550085/STEVE-WEBB-merge-small-pension-pots.html

Also useful reading: https://www.moneyhelper.org.uk/en/pensions-and-retirement

Presumably other people are in the same position as you (two pensions with old and new companies). Could you suggest to your manager or HR team that perhaps a Creative Pensions rep could come in and give a general talk about how pensions work? 

xylophone

Have you seen this?

https://www.creativebenefits.co.uk/creative-pension-trust/members/

https://www.creativebenefits.co.uk/creative-pension-trust/help-centre/how-to-merge-accounts/

Bimbly

x_raphael_xx said:

I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something

I wonder if there is a little more importance to place on this statement. It may be that Pension A, being an older scheme, has some sort of advantage over Pension B? It might be worth finding out a little bit more about them. Feel free to post here.

It may be something small like a difference in the charges which might mean you are better leaving the money you have in Pension A where it is. It could be something more significant. Or the person has got it wrong and it doesn't really matter.

It is unlikely that you will lose money. The value of investments can go down as well as up, but historically the money people put into pension investments increases over the lifetime of the pension.

Linton

x_raphael_xx said:

Looking for advice on what info I would need to make an informed decision.

So we recently had a change in ownership at my place of work. So I have a pension under the old closed company (A), and a pension under the new company (B).
Both are held with the same people (creative pensions)

In my basic knowledge of pensions, I understand that I am charged fees, for the pension management & wotnot.
My idea was to take pot A and add it to pot B, as there are no longer any payments into A, and therefore would be eventually worn away by the fees. Pot B would get a nice injection, and I would get more interest on this bigger pot.
I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something, I don't really understand it.

How do I work out the best course of action? What info do I need to dig out?

Thankees in advance

The person who told you this does not understand it either.  It is likely that the new and old pensions will rise and fall together in much the same way, but as has been said over the longer term the investments will rise.

[Deleted User]

Generally, merging is a good idea. Makes things simpler. That is assuming the two pension wrappers are identical in terms of costs and benefits. Which they likely are, unless we are missing a vital piece of info. “I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something.” On the face of it it does not make any sense. The pension company does not pick investments. You do. Given its the same provider, your options are likely the same. It is however possible that your old scheme is under a different deal. Fees might be lower/compensated by your employer under a different arrangement. Can you ask your pension rep/trustee to spell it out?

Albermarle

The pension company does not pick investments. You do.

In most workplace pensions in the UK, if you do not specifically choose the investments, your money goes into a default investment fund ( sometimes one that lifestyles with your age). I believe that >95% of workplace pensions are in this kind of fund.

So technically you are 100% correct, but in practice for the vast majority, the provider does pick the pension fund.

For some this is just apathy, for some fear of doing something wrong, but for most it is just total lack of knowledge/interest in how their pension works.

[Deleted User]

Albermarle said:

The pension company does not pick investments. You do.

In most workplace pensions in the UK, if you do not specifically choose the investments, your money goes into a default investment fund ( sometimes one that lifestyles with your age). I believe that >95% of workplace pensions are in this kind of fund.

Crazy.  Guess we haven’t changed since our cavemen days when all the focus was on having enough mammoth to eat today and tomorrow. Who cares about “in 10 years time”?  You are likely to be killed by a saber-toothed tiger anyway. 

x_raphael_xx

Thank you everyone for your comments and links etc. I will look though them when I have a clearer mind. TBH this stuff is all greek to me. I need to sit and concentrate on it all. I have 2 months to send off my merge request, so I want to make sure I understand things better before I go ahead.

Deleted_User said:

Generally, merging is a good idea. Makes things simpler. That is assuming the two pension wrappers are identical in terms of costs and benefits. Which they likely are, unless we are missing a vital piece of info. “I've been told this isn't a good idea as I could end up losing money in the long run, depending on where the money is being invested by the pension company or something.” On the face of it it does not make any sense. The pension company does not pick investments. You do. Given its the same provider, your options are likely the same. It is however possible that your old scheme is under a different deal. Fees might be lower/compensated by your employer under a different arrangement. Can you ask your pension rep/trustee to spell it out?

The first pension was started when everyone had to be auto-enrolled a few years back. My employer went through Creative pensions, and I was sent a log in, that was pretty much my involvement. I didn't choose the investments, and not had an adviser as such.

When I log in I can see both pots are under the same fund name, same AMC.

The only difference I can see is while both have a 'Member charge', only the old pension also has a Annual Management charge. (was up to 38p, but no charges since 31/12/19).
30/06/2022 was when the pension was 'closed' and the new one started.
Looking at the 'Fund performance' graphs, they are identical, so I assume the two pots are in the same scheme, so I don't think I would lose out by merging the two.

x_raphael_xx

Albermarle said:

The pension company does not pick investments. You do.

In most workplace pensions in the UK, if you do not specifically choose the investments, your money goes into a default investment fund ( sometimes one that lifestyles with your age). I believe that >95% of workplace pensions are in this kind of fund.

So technically you are 100% correct, but in practice for the vast majority, the provider does pick the pension fund.

For some this is just apathy, for some fear of doing something wrong, but for most it is just total lack of knowledge/interest in how their pension works.

Exactly, I'm probably a mixture of all the above. I know a pension is a good thing, and I bumped my contribution straight up to the higher %.
But I have had little interest gathering more knowledge, which I am trying to work on now!