Most people, during their career, accumulate a number of different pension plans. Keeping your pension savings in a number of plans can result in lost investment opportunities and unnecessary exposure to risk. However not all pension consolidations will be in your best interests. You should always look carefully into the possible benefits and drawbacks and if unsure seek professional advice.<\/p>\n
It\u2019s important to ensure that you get the best out of the contributions you\u2019ve made, and to keep track of your pension portfolio to make sure it remains appropriate to your personal circumstances and meets your aspirations in retirement. Consolidating your existing pensions is one way of doing this.<\/p>\n
Pension consolidation involves moving (where appropriate) a number of pension plans \u2013 potentially from many different pensions providers \u2013 into one plan. It is sometimes referred to as \u2018pension switching.\u2019<\/p>\n
Pension consolidation can be a very valuable exercise, as it can enable you to: <\/strong><\/p>\n Bring all your pension investments into one, easy-to-manage wrapper<\/p>\n Identify any underperforming and expensive investments with a view to switching these to more appropriate investments<\/p>\n Accurately review your pension provision in order to identify whether you are on track.<\/p>\n Why consolidate your pensions?<\/strong> Focusing on fund performance<\/strong> Economic and market movements <\/strong> Lack of the latest investment techniques<\/strong> Significant equity exposure<\/strong> Conversely, more people are now opting for pension income drawdown, rather than conventional annuities. For such people, a lifestyled policy may be inappropriate.<\/p>\n","protected":false},"excerpt":{"rendered":" Most people, during their career, accumulate a number of different pension plans. Keeping your pension savings in a number of plans can result in lost investment opportunities and unnecessary exposure to risk. However not all pension consolidations will be in your best interests. You should always look carefully into the possible benefits and drawbacks and… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1522"}],"collection":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1522"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1522\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1522"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1522"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1522"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nTraditionally, personal pensions have favoured with-profits funds \u2013 low-risk investment funds that pool the policyholders\u2019 premiums. But many of these are now heavily invested in bonds to even out the stock market\u2019s ups and downs and, unfortunately, this can lead to diluted returns for investors. It\u2019s vital that you review your existing pensions to assess whether they are still meeting your needs \u2013 some with-profits funds may not penalise all investors for withdrawal, so a cost-free exit could be possible.<\/p>\n
\nMany older plans from pension providers that have been absorbed into other companies have pension funds which are no longer open to new investment (so-called \u2018closed funds\u2019). As a result, focusing on fund performance may not be a priority for the fund managers. These old-style pensions often impose higher charges that eat into your nest egg too, so it may be advisable to consolidate any investments in these funds into a potentially better performing and cheaper alternative.<\/p>\n
\nIt\u2019s also worth taking a close look at any investments you may have in managed funds. Most unit-linked pensions are invested in a single managed fund offered by the pension provider, and may not be quite as diverse as their name often implies. These funds are mainly equity-based and do not take economic and market movements into account.<\/p>\n
\nThe lack of alternative or more innovative investment funds, especially within with-profits pensions \u2013 and often also a lack of the latest investment techniques – mean that your pension fund, and your resulting retirement income, could be disadvantaged.<\/p>\n
\nLifestyling is a concept whereby investment risk within a pension is managed according to the length of time to retirement. \u2018Lifestyled\u2019 pensions aim to ensure that, in its early years, the pension benefits from significant equity exposure. Then, as you get closer to retirement, risk is gradually reduced to prevent stock market fluctuations reducing the value of your pension. Most old plans do not offer lifestyling \u2013 so fund volatility will continue right up to the point you retire. This can be a risky strategy and inappropriate for those approaching retirement.<\/p>\n