9th January 2024
Navigating multiple pensions
SIMPLIFYING FINANCIAL MANAGEMENT, LOWERING CHARGED AND INCREASING FUTURE FUNDS
You may have worked with several employers throughout your career, accumulating multiple pension plans. This can also apply if you’ve been self-employed or a contractor, resulting in personal pensions.
While multiple pensions can be administratively challenging to manage, they could also be financially draining due to high fees or subpar investment performance. What is a potential solution? Pension consolidation.
This strategy can simplify financial management, lower charges and increase future funds. However, it has potential pitfalls, so seeking professional financial advice is crucial. Let’s delve into pension consolidation and what needs to be considered.
THE UPSIDE OF PENSION CONSOLIDATION
Managing multiple pensions can be a daunting task. Imagine tracking the investment performance, charges and annual statements for five different pensions. This can be overwhelming and time-consuming for many. Therefore, transferring pensions to a single provider can significantly simplify your financial administration.
Moreover, you’re likely paying administrative fees for each pension. This might not be the most cost-effective approach, especially when dealing with providers who have outdated and uncompetitive charging structures.
These fees can affect your investment returns, eventually reducing your retirement funds. By consolidating your pensions, you could save on these charges. However, pay attention to the performance of each pension fund while focusing on fees. Some of your pensions might be underperforming, and shifting to a different scheme could offer better growth potential.
Assessing charges and performance is more complicated, so we’re here to help. We can thoroughly evaluate your pensions and guide you on the best course of action.
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THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.