If you've had a number of jobs over the years, you are likely to have amassed a number of pension pots with various different employers at various different providers.
When you leave a company and stop contributing to their pension scheme you don’t lose what you built up, but there could be a number of advantages in consolidating your various pensions into one:
- Older employer schemes have higher charges and fewer options at retirement than more recent schemes or a low cost Self Invested Personal Pension(SIPP).
- Older pension schemes may not offer flexible ways to access your money at retirement, for example flexi-access drawdown, whereby after age 55 you take out what you want when you want. Withdrawals up to 25% of the value of all your pensions are tax-free and you pay income tax on the remaining 75% at whatever your rate is as a result of your total income for that tax year. If you’re still operating at a high level then this could be 40/45% of tax!
- More modern pensions may also offer a wider range of investment options, including funds with lower charges.
- Easier to manage if all of your pensions are held by one provider in one place - especially when planning to draw an income in the near future.
- Gives you a better understanding of your asset allocation, level of pension you want to achieve, your overall risk tolerance and whether this is the right strategy for you at this stage in your life.
- Consolidating your pensions also means that you don't miss out on any pension pots that you have forgotten about or lost the details of. UK investors are estimated to have lost track of 1.6m pensions worth over £19bn, according to Canada Life. If you have lost details of a pension, then there are services that can help you find it.
If you feel like you would benefit from any of the above get in touch with Jak for a free initial consultation: Jak.Antony@suttonwinsonwm.co.uk
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