Another basic pensions question
Discussion
I feel I should probably know this, and if not then I should get professional advice, but in the meantime:
After the end of my service career, during which I paid attention to only one pension aspect, I now find myself making my way in the world in 'proper' jobs and so far, and forecast, I have been/will be moving between organisations every 2-4 years, and so will end up with a bunch of small pension funds.
Should I merge these into one somehow?
If not, what happens at retirement time? Does one just add up all the little funds to reach a total with which to buy an annuity?
Thanks.
After the end of my service career, during which I paid attention to only one pension aspect, I now find myself making my way in the world in 'proper' jobs and so far, and forecast, I have been/will be moving between organisations every 2-4 years, and so will end up with a bunch of small pension funds.
Should I merge these into one somehow?
If not, what happens at retirement time? Does one just add up all the little funds to reach a total with which to buy an annuity?
Thanks.
It's normally quite straightforward to move the money from one scheme to the next as you move, and keep all the money together. Much easier to keep track of. Just call the two pension schemes to find out their process for moving. The company you leave will be quite happy to lose that admin burden.
OP
1. There is a transfer fee which isn't inconsiderable/to the point in some examples you'd simply never move it.
2. Eggs not all in one basket is also a good idea
3. Consolidating them might save on number of contacts but is it really that much effort?
4. Lots of very small value pensions might be worth consolidating or have them paid into one pension fund you want so constantly run 2 then when you move to next company move that into the cumulative pot.
1. There is a transfer fee which isn't inconsiderable/to the point in some examples you'd simply never move it.
2. Eggs not all in one basket is also a good idea
3. Consolidating them might save on number of contacts but is it really that much effort?
4. Lots of very small value pensions might be worth consolidating or have them paid into one pension fund you want so constantly run 2 then when you move to next company move that into the cumulative pot.
98elise said:
Are you happy managing a SIPP?
If so then I would consolidate them into a single SIPP as you move companies.
If not then leave them as individual pensions so that you have a number of seperate pots growing.
Do not buy an annuity BTW. They are terrible value IMO.
I'd say you need to evaluate all options at the time you are planning to retire. Annuity could be great drawdown could be great etc. If so then I would consolidate them into a single SIPP as you move companies.
If not then leave them as individual pensions so that you have a number of seperate pots growing.
Do not buy an annuity BTW. They are terrible value IMO.
thismonkeyhere said:
I feel I should probably know this, and if not then I should get professional advice, but in the meantime:
After the end of my service career, during which I paid attention to only one pension aspect, I now find myself making my way in the world in 'proper' jobs and so far, and forecast, I have been/will be moving between organisations every 2-4 years, and so will end up with a bunch of small pension funds.
Should I merge these into one somehow?
If not, what happens at retirement time? Does one just add up all the little funds to reach a total with which to buy an annuity?
Thanks.
You need to check there are no benefits (such as guaranteed annuity rates or life insurance) that you would lose upon switching to one provider. These used to be offered many, many years ago, but not for a long time now. Do check.After the end of my service career, during which I paid attention to only one pension aspect, I now find myself making my way in the world in 'proper' jobs and so far, and forecast, I have been/will be moving between organisations every 2-4 years, and so will end up with a bunch of small pension funds.
Should I merge these into one somehow?
If not, what happens at retirement time? Does one just add up all the little funds to reach a total with which to buy an annuity?
Thanks.
Putting them all into one often makes sense and is not the same as putting all your eggs in one basket as the pension provider is simply administrating, it it the underlying investments that provide the diversification.
A SIPP will give you more flexibility than a traditional personal pension plan and now days they are cheap (even free in many cases). You can also keep your pension fund invested in retirement and 'drawdown' an income from it. This means the money is still their to leave to dependents should the worse happen. With an annuity your money is gone on day one. You can weight up these options closer to retirement.
Hargreaves Lansdown gets very good reviews if you want to select your own investments within your pension. Parmenion is very good if you want it managed for you (and ironically, this is cheaper than using HL and doing it yourself!). There are, of course, many other providers you can look at.
Shout if you have any other questions.
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