Consolidate pensions?

Justlurkin

Hello,

My current work pension is with Aviva (Aviva Pension My Future Focus Growth Pn S6). I also have a previous work pension with Royal London (Royal London Governed Portfolio 1).

A quick comparison suggests the Aviva pension outperforms the RLGP1, would it make sense to consolidate both into the Aviva Pension or is there any value in keeping them separate? If there is a reason to keep them separate, the RLGP4 fund appears to perform better than the RLGP1 and may be an option?

Fees are: Aviva @ 0.22% / RLGP @ 0.33% (after profit share)

I’m looking to retire in 5-8 years time.

TIA

Brie

It depends on what you want to do when you retire and what the funds allow you to do.  If you want to get annuities you might want to keep them separate so you can get 2 annuities with different T&Cs - as I understand it you can't split a pension into 2 different funds (happy to be corrected if I'm wrong.)  If you want to take drawdown or put them in a SIPP maybe combining them to get the better fees is a good idea.  

Have you talked to PensionWise?  Is there any sort of pension information meeting available via either scheme?  Have you done your State Pension forecast??  (sounds like this might be all very obvious for you....)

Justlurkin

Brie said:

It depends on what you want to do when you retire and what the funds allow you to do.  If you want to get annuities you might want to keep them separate so you can get 2 annuities with different T&Cs - as I understand it you can't split a pension into 2 different funds (happy to be corrected if I'm wrong.)  If you want to take drawdown or put them in a SIPP maybe combining them to get the better fees is a good idea.  

Have you talked to PensionWise?  Is there any sort of pension information meeting available via either scheme?  Have you done your State Pension forecast??  (sounds like this might be all very obvious for you....)

Hi Brie,
Sorry the RLPG is a SIPP, bought with funds from a previous works pension. I don't want an annuity so will drawdown as required. I haven't talked to Pension wise, would they be able to advise which funds to stick with?
I do have my SP forecast and will max out on that next year.
TIA

xylophone

haven't talked to Pension wise, would they be able to advise which funds to stick with?

No - they do not give advice, just guidance on accessing your DC pension(s).

LHW99

Keeping them separate gives a hedge against an IT failure at one or the other. You wouldn't lose any money, but could have difficulty accessing a payment for a few days / week.

Putting them together reduces admin.

Brie

I found Pension Wise very useful to help me think through some options.  They seem to be quite knowledgeble so if you go in with some specific questions about different types of pensions and how taking drawdown vs annuities for instance can have different consequences.  Helpful for organising your thoughts, perhaps???  But no fund advice would be given.  If you want something more in that line you could try talking to a local IFA as they will generally give a free hour - not a lot of specifics but if you know a fair bit they do start to chatter on about funds etc.  At least that's what I found. 

Albermarle

Justlurkin said:

Hello,

My current work pension is with Aviva (Aviva Pension My Future Focus Growth Pn S6). I also have a previous work pension with Royal London (Royal London Governed Portfolio 1).

A quick comparison suggests the Aviva pension outperforms the RLGP1, would it make sense to consolidate both into the Aviva Pension or is there any value in keeping them separate? If there is a reason to keep them separate, the RLGP4 fund appears to perform better than the RLGP1 and may be an option?

Fees are: Aviva @ 0.22% / RLGP @ 0.33% (after profit share)

I’m looking to retire in 5-8 years time.

TIA

You are not locked into those funds with either pension. It might be easier to have a look  at what other funds are available in each one. It could be as simple as a quick switch of funds within an existing pension.

More important to note is that because one fund performs better under a certain set of market conditions, it might be the reverse in another situation.

The Aviva fund has a higher proportion of equities ( 75%) compared to the RL find ( 55%) Higher equity funds have done better in recent years. The Aviva fund is also much more concentrated on the US, and its performance has been helped by big rises in Big Tech.

Maybe keeping both covers more bases in case of future market turbulence.

tacpot12

Consolidation can make sense if you have a lot of pensions because you have moved jobs quite a bit, but with just two or three, it's easy enough to keep them seperately. Consolidating in the final year before retirement is sensible, but I agree with the advice that two seperate providers gives you protection against IT failures. However, my approach is to have three months of income on deposit with a bank, rather than have a second pension provider. It shouldn't takle more than three months to sort out any IT problem or move the pension to another provider. 

jamesd

The higher bond percentage probably explains why RLGP did less well recently. Interest rates returning to normal after not seen for centuries low rates produced.capital losses for bond holdings.

Justlurkin

Thanks all,

Sorry for the delay in responding.

Keeping them separate for the time being might be the way to go, and possibly moving the RLGP1 pension into RLGP4. When I do eventually go into Drawdown I will keep ~3 months of income accessible in a bank as suggested.

Thanks justlurkin

dunstonh

Keeping them separate for the time being might be the way to go, and possibly moving the RLGP1 pension into RLGP4. When I do eventually go into Drawdown I will keep ~3 months of income accessible in a bank as suggested.

The RL pension has a cash float facility when using drawdown.  Its not as advanced as a SIPP would offer but its good for a PPP offering.    Still important to have cash outside fo the pension though.