Combining pensions question

hildasmuriel

Hello - my husband has been with the same company for over 30 years but they have changed their group plan a number of times. Initially it was with Equitable Life .... and we all know what happened there!

So he now has 3 pensions:

47% of the total in an old Halifax stakeholder pension
41% of the total in an old Clerical and Medical group pension plan
12% in the current company plan with Legal and General

Each of these have been told that his planned retirement date is December 2023 when he will be 68.

He thinks he would be better off combining them before making a final decision about what to do in December to secure our cosy future (fingers crossed)

So what should he check/ask/do before making the decision?
He is thinking of bringing it all into his current one - any obvious downside to this?
Does he need to make a final decision about what to do with his combined pot before he makes a decision to combine?

Please assume we are very naive about all of this - because we really really are.

dunstonh

So what should he check/ask/do before making the decision?

Ask if they have any safeguarded benefits or other forms of guarantee.  Check exit charges.

He is thinking of bringing it all into his current one - any obvious downside to this?

Most workplace pensions are basic and do not offer all drawdown options.  Many are more expensive than invididual plans. However, some can be cheap.  

Does he need to make a final decision about what to do with his combined pot before he makes a decision to combine?

Logically, yes.   There is no point in transferring pensions to another scheme if you haven't decided how you intend to invest or what drawdown methods and drawdown strategy that needs to be used.       Only to find out that the receiving scheme doesn't support the drawdown method you want to use or the drawdown strategy you want to use (e.g. if you were using the yield strategy, then you generally find workplace pensions only offer accumulation units.  So, that would be no good for you.  Or if you wanted a bucketing strategy, then most workplace pensions have no cash account or ability to bucket/segment funds).

So, you should decide on things you need and want before moving the pensions.

penners324

If they're standard stakeholder pension they should be pretty easy to transfer.

He can probably even transfer using the app or online portal of whichever 1 he wants to keep

xylophone

Is your husband in receipt of his state pension?

Assuming that he has no safeguarded benefits in the CM plan ( Guaranteed Annuity Rate for example), there should be no difficulty about transferring to the most modern of the plans, the L&G  (which presumably will offer full flexibility?) if that is what he wishes.

What does the information booklet on his current pension have to say about transfer in/pension access options?

Does he have on line access to all three pensions?

He could seek an appointment with Pension Wise for a general discussion about options.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

It could be that a transfer of all three to another plan altogether might be better in his case.

If he thinks that he would prefer to take advice specific to his circumstances, he could consult an IFA,

https://adviserbook.co.uk/

He would tick "confirmed independent" and other options as required when the menu comes up.

hildasmuriel

Thanks all.

Yes he receives his State Pension. He also has a small Civil Service Pension as he was in the CS for the first 16 years of his working life. That has been in payment since he was 60.

Unfortunately he cannot check the first two pensions online - they are both run by Scottish Widows and the website says they cannot be accessed online. He needs to phone them (I know, is this the 1990s?).

I'll let him know what he needs to check on before making his move. 

He has some ideas about what he wants to do with the funds but I'll do another post about that another time - I think he will make a Pensionwise appointment first.


One other vague sounding question - each pension provided asked his planned date of retirement. Does that mean they do something different with the funds in the run up to his date. Are they less riskily placed?

MallyGirl

they might have lifestyling and de-risk in the run up to retirement on the assumption that he would be buying an annuity. It will depend on the terms he signed up to as to whether this happens

Marcon

hildasmuriel said:

One other vague sounding question - each pension provided asked his planned date of retirement. Does that mean they do something different with the funds in the run up to his date. Are they less riskily placed?

Not necessarily. They needed a 'planned date of retirement' (which can always be changed by him) at the time he joined each plan to enable them to provide illustrations of possible benefits.

'They' only 'do'(!) something in the run up to retirement if he's in some sort of lifestyle plan where funds are moved from being heavily invested in potentially volatile equities to what should be the calmer waters of bonds...but there's no guarantee that is less 'risky', as recent market movements have demonstrated all too clearly. If he doesn't know the underlying funds in which each plan is invested, now would be a good time to check.

Albermarle

Unfortunately he cannot check the first two pensions online - they are both run by Scottish Widows and the website says they cannot be accessed online. He needs to phone them (I know, is this the 1990s?)

If the pensions were set up many years ago, it is normal that you have to deal with them in the old fashioned way, as they were never designed for the internet age.

 I think he will make a Pensionwise appointment first.

This is a good idea, but be aware they will only really explain options, and will not offer any personalised financial advice, such as which investments to choose.

One other vague sounding question - each pension provided asked his planned date of retirement. Does that mean they do something different with the funds in the run up to his date. Are they less riskily placed?

There can be two reasons for this ( and most providers do the same and request a planned retirement date )

Firstly they like to contact you nearer to the date to explain your options when you retire.

Secondly , as you intimated and Mally Girl commented, the investments maybe in lifestyle funds that derisk as you approach retirement. This is not always a good thing, as you can derisk too far, especially if you intend to remain invested for many years after retirement.

dunstonh

One other vague sounding question - each pension provided asked his planned date of retirement. Does that mean they do something different with the funds in the run up to his date. Are they less riskily placed?

When consolidating the pensions in readiness of retirement, and the intention is to use drawdown, you would probably set the scheme age to 99.

hildasmuriel

Again - thanks everyone for advice.

Husband has now got a list of questions and stuff to think about.

I love a spreadsheet and am always updating our projected retirement figures - every time a monthly bill changes, I update..... but it is frustrating working with estimates of income.

My husband only gets annual updates from his two old pensions and so who knows what's in there? The last updates in August last year showed a drop in funds, as expected, but now we're having to guess what might be in there.

Same with my Civil Service Pension - because I am not a current CS I cannot check the figure online and have to wait for annual statements.

For a spreadsheet junkie like me, it's irritating.

dunstonh

For a spreadsheet junkie like me, it's irritating.

Pensions that only use insured funds are required to send a statement annually.    Pensions that have whole of market investments are quarterly.   However, most modern pensions, irrespective of type, have online access for valuations.

Same with my Civil Service Pension - because I am not a current CS I cannot check the figure online and have to wait for annual statements.

Although that figure doesn't really change bar the annual increase for inflation.  So, you don't need to check it online.