Thursday February 25, 2021 - 15:18:52 GMT
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Consolidating your pensions is very important, especially if you are considering evaluating how much pensions you have for yourself in savings for your future after retirement. A fast-growing start-up in the UK called Pensionbee reviews, has proven incredibly well to be a top choice when consolidating your pensions together from multiple workplaces. Of course, before you venture on taking action, continue reading to find out exactly what a pension consolidation is and what you should exactly know for yourself.
What is Pension Consolidation?
Pension consolidation is essentially when you combine all the pots of pension into one, to bring together the multiple careers and separate pots you have created in the past. It is very normal that for each employer, you will be offered a different pension pot to put away for, or maybe you are self-employed now and used to have a few pension schemes that you used to be a part of previously. It is important to consider your pensions, as there will be a time where you will need to use them separately or bring them together.
To work out what to do, you should take into consideration what kind of schemes they are and what their worth and value are all together. Knowing how they are being managed is important too, as sometimes you will find there are special guarantees that come attached too, so it is definitely worth checking in with an advisor to know your plan of action from here on.
Should you Consolidate your Pension?
This answer to this question of course will all depend on the circumstances you are in currently. However, the reasons you could personally wish to consolidate your pensions could be anything from wanting to save money, achieving sustainable and better growth from your savings, and of course, the convenience of keeping track of all your payments and managing it better for yourself.
Do you Save Money from Combining Pensions?
Each separate pot will have different agreements to their annual management. Meaning, the fees may not be the best on some, where on others they are lower and so on. Therefore, combining your pots into one management is certainly an efficient way to save money and reduce the waste of multiple fees. For that reason, we would advise that you get the right advice to make sure you make the right decision for you and your money.
The advisor you get for this purpose will make sure you avoid large fees and go for the lowest possible. In addition to this, the management fees of 1 percent can reduce the size of your overall pot by a total of 20 per cent over the entire period of your working life. For that reason, making a change of consolidating for the lowest fees could make sure to save you thousands within the long-term aspect of things.
Do you Achieve Better Growth by Merging Your Pensions?
The overall performance of funds is an important factor to consider when you decide to combine pensions into one pot. If you have more than one, it is highly likely that one performed much better than others and for that reason you will be nearing that one as your optimal option most likely. Yet a financial advisor will even be able to suggest a whole new one all together and therefore will provide to you better rates through that approach. It is all about finding the best rates overall, really.
Is it More Convenient to Consolidate Pensions?
The answer is of course yes. It is far easier to manage one than many, because you will just check one balance each year. You will need to make sure that you invest in the right type of fund for your profile, as this will change the closer you get to retirement. When you come to draw your pension, it will become far easier when you are drawing from one pot all together. So yes, overall it is far easier to have one pension to manage, than multiple. There will always be a risk that you lose track of how one is performing in relation to the others you have, if you do not consolidate. Especially when it comes to the paperwork, you may even find that you can lose your pensions paperwork and therefore have a lost pension. It can be a headache!
Are there any reasons to actually not consolidate my pensions?
Consolidating your pensions is a very wise move and there are no reasons otherwise for you doing this move. You will need to make sure however, that your moves are advised and monitored by a financial advisor as they usually will have the best solution for you and your everyday lifestyle. Make sure you seek out that advice.
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