Can I merge old pension schemes?
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I’ve had a number of jobs over the years and contributed to a pension scheme with five of them, including my current work scheme. I’m in my early fifties now and am beginning to think seriously about what my retirement income is likely to be, so I have dug out the paperwork for all of them. The four schemes that I joined before all seem to have different rates of return, and they range in value from £8,000 to £40,000. My current scheme is worth about £150,000. Can I – and should I – move them all into my current scheme?
Matthew Beck of Smith & Pinching responds:
The decision about what action to take in respect of your old pension schemes will depend on a number of different factors. In order to advise you, I would need to understand every aspect of your financial circumstances including what you are hoping to achieve in retirement. This would enable us to put together a detailed financial plan – and we would then be able to assess if the old schemes are working to deliver what’s needed.
When looking at the old schemes themselves, I would need to know everything about them including their transfer values, their performance, where the pension investments are held and the fees being applied. It’s also important to explore if the schemes have any additional benefits such as guaranteed income levels. These can be hugely beneficial and would probably be lost if transferred.
We would also need to look in detail at your current workplace scheme to decide if this is the right place to put any transferred pension savings, taking into account where the funds are invested, what contribution levels you are making and how they are performing. It’s important to ensure that your pension investments are right for you in terms of the level of risk you are taking, for example, and that their performance will meet your targets.
Independent advice at this point will be valuable: you need to make sure that you have a realistic, workable plan and that you are on track to achieve the retirement lifestyle you desire. We can demonstrate how your plan aligns with your goals using lifetime cashflow planning software. This plots the value of your fund, including projected growth, against expected retirement expenditure to show if changes might be needed to your strategy to fit your long-term goals.
Any opinions expressed in this article do not constitute advice. The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.
For more information, please visit www.smith-pinching.co.uk
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