To consolidate or not to consolidate, that is the question.

Sean Westwood
Employee Benefits Team Director
16 September 2020
1 minute

Some people like to transfer funds from a previous job’s pension. The benefits could be to gain access to income drawdown, lower charges, a preferred investment option or simply to have one piece of paper rather than two. The latter does not count as a sound rationale for a good financial decision, so analysis should be undertaken. You need to look out for any loss of guarantees, protected tax-free cash and whether there is a transfer penalty. The oldest policies may have higher charges and limited functionality, but sometimes valuable guarantees too.

Leaving the funds where they are can also be beneficial. You diversify the risk across different providers and investment choices. With ‘retirement’ now being more of a transition than a cliff edge, taking different policies at different dates is often the optimal way to access your retirement benefits.

If you have 10 different pensions, that can be cumbersome, and at least some consolidation is likely. If you have two pensions, you may choose to keep them separate. Most providers now have a slick online option to make the transfer from old employer pension to new, without the need to take advice. Think carefully; the best answer for you is down to your personal circumstances, and if you are unsure then you should always seek advice.

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