Merge Pensions or keep separate

elbyrneo

Hi there

I have a few relatively small pensions (range between 20k and 50k in current value) from previous roles where I didn’t stay long with the companies. All defined contribution pensions.

Very happy with my current pension - great investment choice (includes the usual lifestyle dynamic type funds and also a self-direct option), a reasonable fee structure, a simple online portal and good service by the administrator.

I’m wondering if there is any reason why i would not Transfer In the smaller pensions? Does having separate pensions give any advantages if broadly they are performing similarly? Any particular things i should consider when comparing policy documents etc?

I am going to get some advice but wanted to do my own research first, any pointers appreciated!

Thanks a mill

Henry Ford III

The only advantage might be an economy of scale (1 set of policy charges) but the potential disadvanatage is institutional investment risk (if one provider underperforms).

KingCong

If your current pension scheme's fees are less than the other pension's fees, that may be a reason to merge them. Also if you're not planning to stay 2 years plus in the current role, then merging in an older pension would allow you to keep any employer contributions with your current scheme, assuming that the combined pensions have 2 years or more of contributions (you normally lose employer contributions if you leave within 2 years).

On the other hand, having a few different pensions can come in handy, as some of them can be "retired" early from the age of 50 on, giving you access to 25% of the fund tax free (up to an max of 200k over all the pensions) while the remainder can continue to be invested in an ARF. Could be useful for kids college fund etc.

tech

I was in the same boat, I kept separate and converted to retirement bond, can access cash at 50! Will be a nice birthday present or car!

KingCong wrote: »

If your current pension scheme's fees are less than the other pension's fees, that may be a reason to merge them. Also if you're not planning to stay 2 years plus in the current role, then merging in an older pension would allow you to keep any employer contributions with your current scheme, assuming that the combined pensions have 2 years or more of contributions (you normally lose employer contributions if you leave within 2 years).

On the other hand, having a few different pensions can come in handy, as some of them can be "retired" early from the age of 50 on, giving you access to 25% of the fund tax free (up to an max of 200k over all the pensions) while the remainder can continue to be invested in an ARF. Could be useful for kids college fund etc.

elbyrneo

tech wrote: »

I was in the same boat, I kept separate and converted to retirement bond, can access cash at 50! Will be a nice birthday present or car!

Interesting, thanks. have no idea what a retirement bond is, how does it differ from a standard pension? Will google it now but any insights appreciated!

mbradso2003

Retirement Bond is once off premium Pension Policy.

Would look at charges you are paying and if you are happy with investment returns/options.

Some pros of merging

Dealing with one company
Same investment strategy
Can make retiring easier
Enables faster vesting and entitlement to employer contributions

Some pros of keeping separate

Different retirement ages
May be possible to draw down pensions from age 50 from previous employment

I have opted merged some pension and keep some separate and I work in industry so no simple yes or no.