Three Old Pensions, what to do with them?

Determined89

Hello,

Sorry if this has been asked several times before, I am slightly overwhelmed with a lot of information that I don't understand.

I currently have three 'old' pensions from previous employers that are not doing a lot. They haven't had any contributions into them for over a decade, and have been sat there with very low values of money in them. They are;

Nest £132.40

Royal London £1270.87

Scottish Widows £3880.95 

Total - £5,284.22

I don't know what to do with them, or what to best do with this money. I feel like leaving them is not really worth it, and I am maybe best moving it to be invested elsewhere?

For reference, I am 37, and work FT in the NHS (Scotland, although I started in England) and have been able to switch my pensions over successfully, as far as I am aware. I am planning on checking this today. I have contributed to my pension fully since the day I qualified (I started work in Dec 2017), and these previous pensions are from ad hoc jobs I had when I was 18-22, and I clearly didn't contribute lots as I was financially unaware at that time.

My long-term work plans are to eventually go private, open my own business and become self-employed. I wish to maintain some form of a bank contract with the NHS and continue to add to my NHS workplace pensions for as long as I reasonably can.

NB - I have some debt, but I am saving for private medical treatment that I am due to undertake in the near future, so I am paying above my minimum payments on all debts and being as frugal as possible to also save. Once the treatment is done, I plan on clearing my debts in full and starting to save for a mortgage/first time home. I have £3,000 that was recently gifted to me, so I plan on starting a LISA soon due to my age to get that open/started. I was going to do this a while back, and it never happened, so I am now in a position of slightly more urgency as my age is pressing on.

Thanks for any help/suggestions.

LHW99

You need to get the LISA opened quickly, as you are clode to the age limit for opening, and they will probably change from April 2028. The replacement will only be for house purchase, not for retirement as well (if that's what you want it for).

Contributing to the NHS pension is good. If you leave it becomes "deferred", and should keep increasing over the years, in line with the regulations (you should have been given details, or can find them online).

The three pensions you mention are DC "pot of money pensions". The first thing to do is to work out what fees are due on each (particularly the RL & SW). Then you can decide where to consolidate them - one pension fund would be easier to keep track of than 3. Don't transfer them to NEST, as they don't have a very wide range of funds, and I believe you would be charged ~!.8% of what you transfer. RL & SW likely won't charge for transfer.

You will always have the choice of tranferring to a different provider in future, so putting them all with one company for now would make that change easier.

QrizB

I agree that consolidating all three with a single provider is a good idea.

Don't transfer them to NEST, as they don't have a very wide range of funds, and I believe you would be charged ~!.8% of what you transfer.

I agree that Nest don't have a great choice of funds, but IIRC it's been said on this forum before that they don't apply the 1.8% charge to transfers?

Determined89

@LHW99 and @QrizB thank you both.

My immediate thoughts were to consolidate and look at another form of investing.

Would you recommend that I open a LISA now, just to have one to my name and transfer the funds at a later date?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/82105624#Comment_82105624

Correct - the charges applies to 'new money' but not to transfers in to NEST.

Marcon

I have £3,000 that was recently gifted to me, so I plan on starting a LISA soon due to my age to get that open/started. I was going to do this a while back, and it never happened, so I am now in a position of slightly more urgency as my age is pressing on.

Makes sense to consider opening a LISA with a modest opening contribution, if only to keep your options open in case you miss the boat again and hit the upper age barrier. You don't have to pay in the whole of your inheritance. Worth a read: https://www.moneysavingexpert.com/savings/lifetime-isas/

UKTaxHelper

Open it now, it needs 12 months before a house purchase.

Determined89

https://forums.moneysavingexpert.com/discussion/comment/82105910#Comment_82105910

Thank you, I will open one this week.

I have no desires to plan for a house purchase within the next 12 months, anyway. I have zero towards a desposit.

Determined89

https://forums.moneysavingexpert.com/discussion/comment/82105779#Comment_82105779

Thank you, I will use some of this to open the LISA. I will be able to make the £4,000 max contribution before the next financial year. I have set up a moneybox LISA and now currently waiting for them to contact me.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82105761#Comment_82105761

My immediate thoughts were to consolidate and look at another form of investing.

If investing for future retirement, then a pension nearly always wins, due to the tax relief on contributions. This has an even bigger effect if you are a higher rate taxpayer. You can change how your money is invested within the pension.

Just for the sake of lower admin, I would consolidate these pensions into one. Maybe when you have filled the LISA , or when you go self employed ( and lose the NHS pension I assume) you can start contributing again.

If investing for the medium term - say 8 years plus, but you may need the money before your late Fifties, then you can invest via a S&S ISA.