There is a likelihood of not working for one employer in your lifetime. It means you are going to contribute to a number of pension schemes in your working life. You can lose track of most pension schemes if you keep changing jobs. That is why you should consolidate your pensions into one account to make it easy to track your pensions.
When you merge your pension pots, you reduce the fees you incur and gain access to wider investment opportunities. Here are some of the reasons why you should consider consolidating your pension:
Remove the hustle of managing the pots
The only reason you should combine your old and new pensions into one is that it will save you a lot of time. It will remove the hustle of managing different plans from different providers.
Consolidating your pensions also reduces the paperwork since you will have only one pension account to keep track of.
Improve your investment potential
If you have a lot of pots that are not working to grow your savings, combining your pensions can be a perfect choice. It is not easy monitoring multiple pension schemes all in your name.
It means if most of your pension providers are not making investment decisions that can boost your income you have to combine them into one pot for ease of managing. Switch to a pension scheme provider who offers you a wide range of investment options. This way, you can easily track how your pension fund is performing.
Save money on charges
Another reason you should combine your old pensions is that it can help you save on charges.
Once you have multiple pension plans, you will be paying admin fees for each scheme. It is not easy keeping track of your overall cost. If some pension providers are expensive, it is not cost-effective for you.
Fees eat into your investment returns and the amount of money you can take home once you retire. Therefore, you should always choose one of the best value pension schemes you have in the industry.
Easy and flexible access to your money
When you have your pensions consolidated in a single pot, it is easy gaining access to your money when in need. In most cases, older pension schemes are not likely to offer you flexible ways to gain access to your money once you retire. Once you combine your pensions, you can choose how you will be dealing with your retirement savings.
Older pension schemes established before pension freedoms took effect are not as flexible as you would like them to be.
Yes, it is possible to move all your pensions to one provider or account. However, before you decide, you want to weigh the costs and benefits. Make sure you will not give up on valuable guarantees that come with sticking to your existing pension scheme.
Always consider what you are more willing to give up whenever you decide to combine or move your pension schemes.