Should I consolidate my pensions?
The odds are stacked against women when it comes to economic equality and financial empowerment. And it doesn't help that financial institutions largely exclude women. The whole system needs an overhaul, but in the meantime we want to answer your money, finance and economics questions. Every week we'll answer one of your questions in a useful and straightforward way. Today's question is...
Should I consolidate my pensions?
Listen to the answer
You’re going to hate us for this one, but the answer to this is, it depends. If you have had several jobs (11 on average over one’s lifetime the Department for Work and Pensions predicts) in which you have paid into a pension through work (a workplace, or ‘defined contribution’ pension) you may have several different pension pots in several different places.
The benefit to consolidating them is you can keep them all in one place and not forget about any of them, and you might get better returns if one scheme is better than another. You’ll be paying charges on just one instead of multiple, which may also be cheaper. But each workplace pension will have different benefits, so, annoyingly, you’ll have to go through and weigh these up. Similarly, each will have different rules about taking your money out to put elsewhere - some will charge you and this may end up minimising the potential savings you might have from putting them all together.
From a brief search it looks like some of the big providers - Aviva, Nest, People’s Pension and Hargreaves Lansdown - are unlikely to charge you to transfer your pension to another provider. But it’s quite hard to get a clear picture without having access to every single provider. So what we thought would be most useful is to talk about our own experiences. Selin has consolidated her Scottish Widows and Hargreaves Lansdown pensions, and Natasha has chosen not to consolidate her Nest, Hargreaves Lansdown and Royal London pensions for the time being. We explain the process and reasoning in this week’s audio answer.
Hopefully as your action of the week from the first newsletter, you’ve found and accessed all your pensions. Armed with that information, this week take a look at the benefits and charges for each of your pensions and decide whether consolidating might be a good idea.
If you do want to think about consolidating, PensionBee might be a good place to start the process. We reached out to PensionBee CEO Romi Savova, who said: “To avoid losing out on hard-earned savings, it’s a good habit to consolidate old workplace pensions into a personal pension each time a saver changes jobs. This way their personal pension becomes their ‘home’ pot, that they’ll keep until retirement, and they’ll only ever have to manage this and a current workplace pension.”
About us
Selin and Nat are financial journalists who met working together at a publication in London. If you are ever worried a question you have might sound stupid, remember Selin once asked Nat if Noel Fielding was a singer.
Got a question to ask? Send it to selinandnat@gmail.com and we'll try to answer it in an upcoming newsletter. All questions are anonymous. Like the newsletter? Support us with a virtual coffee.
