During your career, the likelihood is you’ll have multiple employers. That means you’re also probably going to have multiple Workplace Pensions.
On the face of it, you may think that’s okay, your money is invested and hopefully growing towards your retirement.
But on closer attention, you may realise that multiple pension pots could mean a weaker retirement.
The drawback with multiple Workplace Pensions is multiple pension charges, in effect sapping your rate of growth. Over time, this could make a dramatic difference. Consider the power of compound growth over decades, with multiple pensions you are basically having compound costs, potentially losing out on extra growth you could have had with just one pension charge. For example, you could be paying for just one pension, instead of multiple pensions. The savings made could be invested towards your future.
That’s why pension consolidation could makes sense for you. Pension consolidation is simply transferring all of your pensions into one. You then pay just one pension charge, meaning you are keeping and potentially growing more of your money for retirement.
Having all your pensions in one place will make it easier to manage your investment, you can track performance in one place and get a clearer view on how your wealth is growing towards your retirement goal.
Before deciding if pension consolidation is right for you, you should consider all of your options. You should be aware that there may be exit fees on some pensions and there may be valuable guarantees that could be lost on transfer. For this reason you should list all of your pensions, and fully assess your circumstances. Speak to a financial adviser if you are uncertain of what the best course of action is.
You can learn more about consolidating pensions in our Master Your Money video. Subscribe to the True Potential YouTube Channel to learn more.
With Investing, your capital is at risk. Investments can fluctuate in value, and you may get back less than you invest. Past performance is not a guide to future performance. This blog does not constitute a personal recommendation or financial advice.< Back to Blog