Merging pensions?
Discussion
I am an absolute financial dunce. I have always taken the bury-head-in-sand approach over my pensions. So I don't understand them very well. However, I am now 51 and finally trying to force myself to pay attention and work out what to do.
I have 4 pensions plans. One actively being paid in to (my current employer's scheme) and 3 from former employers' schemes which haven't been actively paid in to for 10, 15 and 20 years respetively (roughly). I only just dug them out last year to find their values, and I've just looked at them again to see their current values. Then, out of curiosity, I've calculated how much they've grown over the last calendar year, to see which ones are doing better than the others. They have grown at 4.36%, 7.27% and 3.29% respectively. The one which has grown most is the biggest of the 3.
My question is this: is it worth merging the two lesser pefroming pensions in to the better performing one? What do I need to consider, and what are the potential risks and benefits associated with doing this?
I have 4 pensions plans. One actively being paid in to (my current employer's scheme) and 3 from former employers' schemes which haven't been actively paid in to for 10, 15 and 20 years respetively (roughly). I only just dug them out last year to find their values, and I've just looked at them again to see their current values. Then, out of curiosity, I've calculated how much they've grown over the last calendar year, to see which ones are doing better than the others. They have grown at 4.36%, 7.27% and 3.29% respectively. The one which has grown most is the biggest of the 3.
My question is this: is it worth merging the two lesser pefroming pensions in to the better performing one? What do I need to consider, and what are the potential risks and benefits associated with doing this?
Edited by ElectricSoup on Wednesday 3rd March 10:48
That video covers most of the issues. Defined Contribution - possible to move it. Watch out for any contained benefits that may be valuable. 7% over the last year is not too shabby at all, but you aren't limited to moving into that pension as you could move them all to another provider if you wanted to.
Yes I'm wondering about moving them all to me current employer's scheme, as I'm probably going to end up retiring when I leave here. But trickier to work out the percentage growth in it though without the contributions which have been made over the year.
It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
ElectricSoup said:
Yes I'm wondering about moving them all to me current employer's scheme, as I'm probably going to end up retiring when I leave here. But trickier to work out the percentage growth in it though without the contributions which have been made over the year.
It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
You don't have to move them into your current pension scheme - you can port them into a SIPP or personal pension with any number of providers. You'd need to be sure your current scheme was performng well before putting all your eggs in that basket.It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
Mr Pointy said:
ElectricSoup said:
Yes I'm wondering about moving them all to me current employer's scheme, as I'm probably going to end up retiring when I leave here. But trickier to work out the percentage growth in it though without the contributions which have been made over the year.
It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
You don't have to move them into your current pension scheme - you can port them into a SIPP or personal pension with any number of providers. You'd need to be sure your current scheme was performng well before putting all your eggs in that basket.It was my imporession that the one which has grown at 7.27% this year seemed pretty robust. It's a Standard Life Stakeholder pension, if that shines any additional light?
Consolidated generally makes sense but you really need to start with answering some questions eg.
When do you want to start taking a pension
When will you stop work
How much income will you need once retired
What other savings / debts do you have
What guaranteed income do you expect to get eg. state pension
Answers to all these will help inform you about what action you should take now with regard to your existing pots. After all, you are only 4 years away from being able to start taking a pension so an investment that returns 7.27% may be too volatile for you.
How comfortable / willing are you to spend time understanding taxes, investments and doing financial planning? There are plenty of books and videos but it does take a lot of time and it's easy to miss opportunities that are available.
When do you want to start taking a pension
When will you stop work
How much income will you need once retired
What other savings / debts do you have
What guaranteed income do you expect to get eg. state pension
Answers to all these will help inform you about what action you should take now with regard to your existing pots. After all, you are only 4 years away from being able to start taking a pension so an investment that returns 7.27% may be too volatile for you.
How comfortable / willing are you to spend time understanding taxes, investments and doing financial planning? There are plenty of books and videos but it does take a lot of time and it's easy to miss opportunities that are available.
ElectricSoup said:
Yep, thanks. What I'm unsure about is how to ascertain if my current scheme is indeed performing well.
Don't you get periodic performance reports?Also with many pension schemes you can pick what they are invested in. That makes returns an aspect of the investment choice rather than the scheme itself.
All else being equal, high fees are very much to be avoided. Let's say you make an 8% investment return - 2% fees is 1/4 of your returns up in smoke.
LeoSayer said:
Consolidated generally makes sense but you really need to start with answering some questions eg.
When do you want to start taking a pension
When will you stop work
How much income will you need once retired
What other savings / debts do you have
What guaranteed income do you expect to get eg. state pension
Answers to all these will help inform you about what action you should take now with regard to your existing pots. After all, you are only 4 years away from being able to start taking a pension so an investment that returns 7.27% may be too volatile for you.
How comfortable / willing are you to spend time understanding taxes, investments and doing financial planning? There are plenty of books and videos but it does take a lot of time and it's easy to miss opportunities that are available.
All great stuff.When do you want to start taking a pension
When will you stop work
How much income will you need once retired
What other savings / debts do you have
What guaranteed income do you expect to get eg. state pension
Answers to all these will help inform you about what action you should take now with regard to your existing pots. After all, you are only 4 years away from being able to start taking a pension so an investment that returns 7.27% may be too volatile for you.
How comfortable / willing are you to spend time understanding taxes, investments and doing financial planning? There are plenty of books and videos but it does take a lot of time and it's easy to miss opportunities that are available.
When do you want to start taking a pension
As soon as possible
When will you stop work
As soon as I can make the numbers work
How much income will you need once retired
I think I'm at the stage now of trying to work out how much I can eek from what I've got - I'd like to retire on £1m a year but it ain't happening.
What other savings / debts do you have
Good point. I'm mortgaged until 2034, but I have massive equity in the property now. This will be a major source of retirement income, as I'm going to downsize. No other debt.
What guaranteed income do you expect to get eg. state pension
Full state pension at 67, but I don't want to wait that long to retire
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