How Can I Make the Most of My Pensions? With Romi Savova
How Can I Make the Most of My Pensions? With Romi Savova
💸 On average, we will have 11 different jobs during our careers.
If you've built up numerous workplace pensions over the years from different employers, it can be difficult to keep track of how they are performing. While consolidating your pension will obviously make it easier to monitor, there may be drawbacks for you to be mindful of.
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“It’s always a good time to look at your pensions and get in control of them. And I think now, especially as we think about the current economic environment, we may help ourselves to also think about what the future looks like. ”
pension consolidation explained
Pension consolidation is the process of bringing your old pensions together into a new plan, which occurs through the transfer of any old pensions you have from various different jobs or personal pensions into your chosen pension provider.
Consolidating with Pension Bee is fairly simple. You can sign up in a couple of minutes, and they will request your old pensions to be sent over into your new online plan. Every provider does this a little bit differently, but generally speaking, you can get the process done online and your new pension provider will take care of the process with your old pension providers, letting you know if there are any hiccups or actions to take along the way.
Your investments in your old pensions will get disinvested, meaning they will be sold and converted into cash. That cash will then be transferred into your new pension and your new pension provider will invest it into your chosen plan at the time.
the benefits and potential drawbacks
The benefits of consolidating your pensions are that you will have them in one place, ideally with the pension provider that you've chosen for yourself. That pension provider can give you clarity over how much you have, over where your pension is invested and if it's invested in the way that you want it to be, how it's doing, your contributions and how much you need to pay in — and of course over your fees.
Thus, bringing your pensions together in one place puts you in control of your retirement savings, and ideally sets you on the right plan to get saving for the future.
With pensions, there can be a myriad of different charges, so you do have to compare them. But it is certainly possible to reduce your overall fee by bringing your various pension pots together.
This can especially be true if you are merging them and therefore obtaining one larger fund, because larger funds are typically subject to slightly lower fees. To give you an example, at Pension Bee, when your pension exceeds £100,000, any proportion over that will be charged at 50% less than the proportion below - so it can be quite beneficial for you from a cost perspective.
You should also check what the costs are of the plan that you're leaving and make sure that you are choosing the best pension for you.
checking if you should consolidate
Most pensions these days are fairly straightforward and simple. However, if you have an older type of pension, for example one that you acquired in the 90s, then it's possible that you have certain beneficial features such as a guaranteed annuity rate or even a defined benefit, which is the promise of a future salary in retirement.
If you have one of these features, then they would likely be lost when you transfer your pensions. In the same vein, if you have one of these older types of pensions, there could be exit fees and therefore you would incur an additional charge to move your money.
If you choose to use Pension Bee, then typically you just need the name of your old pension provider. However, if you choose to go DIY or to try and do this yourself in another shape or form, then you should dig out the old paperwork. You may wish to contact your previous employers if you don't have access to that paperwork. And generally you should make sure you have things like policy numbers and paperwork to hand so that you can have a look yourself.
Some pension providers are very quick at transferring and honouring your wishes and could transfer your pension in, say, ten working days. Other pension providers can be a lot slower and some pension providers have been known to take as long as six months to move a pension, often throwing obstacles in your way.
One of the ways that you could trace old pensions is through the government's pension tracing website. You could type in the name of your old employer and you will see the matched provider showing up online. Bear in mind that the database isn't kept fully up to date.
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You can follow and connect with Romi at:
LinkedIn: Romi Savova
Website: pensionbee.com
*** Our podcast partners PensionBee are also offering you a £25 pension contribution (£20, plus £5 in tax relief) when you sign up. To claim the offer, follow this link: https://www.pensionbee.com/vestpod. Capital at risk. ***