The average individual might work from around age 18 to between 60 and 65 years of age, that’s a working life potentially spanning five decades. Changing your employer (if not your entire career) several times is now the norm. In fact, statistics demonstrate that you’re likely to change jobs 11 times before you retire which can mean that some people have as many work place and/or private pensions to keep track of!
How many pensions do you have? …
Even if you haven’t had that many jobs, you may still have a number of different pensions to keep track of. Pensions can be confusing, but there is an alternative way to help keep on top of them.
Is a Pension Transfer right for me?
Pension Transfers allow you to combine some or all of your pensions in one place. Consolidating your pensions means fewer statements to keep an eye on, along with fewer and potentially lower management charges overall. They become far easier to look after and give you greater ability to monitor both charges and risk. It may also be that deferred workplace schemes do not give you the full range of options for accessing your pension money from age 55 as the scheme rules will dictate from what age your pension is available to you, and this could be 60 or 65. You may be restricted on your investment choices within your existing schemes, which over time could potentially also restrict investment growth.
Does it matter what kind of pensions I have?
Pensions fall into two broad groups, Defined Contribution schemes and Defined Benefit schemes.
Defined Contribution schemes build up a pension pot to provide you with a retirement income based on contributions from you, and maybe your employer as well. Your pot is put into various types of investments, including shares, and the value of your pension at retirement is based on how much has been paid in and how well the investments have performed, less any charges.
Defined Benefit schemes pay a retirement income based on your salary and how long you have worked for your employer. Please see my article entitled Understanding My Options – Deferred Company Pension Schemes for more information on this type of scheme. http://www.speedfinancialsolutions.com/understanding-options-defined-benefit-company-pension-schemes/
Not all pension types can or should be transferred. It’s important that you know and compare the features and benefits of the plan(s) you are thinking of transferring. It can be a complex decision to work out whether you would be better or worse off combining your pensions.
If you’re thinking about transferring out of a Defined Benefit scheme in order to access your pensions more flexibly you should consider your options very carefully and will often need to receive professional financial advice before you can do this.
How can I combine my pensions?
You can usually do this using our service. If you would like to know more contact firstname.lastname@example.org
What if I can’t find a pension?
The Pensions Advisory Service is a government agency that gives free help and guidance on pensions that can help you track down lost pension details. See:
What should I consider before transferring?
It is very important to understand if your old scheme comes with any guaranteed benefits that you will be giving up by leaving.
Consider the annual charges you are paying with your existing pension providers. Once you know, compare them with the charges for investing via your chosen provider. Bear in mind that different providers have different charging structures so make you sure you understand all the potential fees you could be charged. Paying a slightly higher fee overall may be worth it if you value the other benefits of consolidating your pots.
What investment choice is available within your existing pensions.
Think about what is more important to you in retirement, a guaranteed income for life or flexibility and freedom to make your own choices and ability to vary both income and lump sums taken from your pensions. In some cases the best way to take your pension is by a series of lump sums. You can take lump sums from most defined contribution pensions until your money runs out should you wish.
Your health and family history of longevity may also be a consideration. If your parents have lived to age 100 then a guaranteed income for life may offer better value, whereas if you have a history of ill health opting for a guaranteed income for life may not offer you the flexibility you’d like in order to vary your income and take lump sums, nor may a guaranteed income for life offer the best value for money when considering the value of your pension funds that could be passed on in the event of your death.
This list is not exhaustive as every individual has different needs and our preference is always to talk through your requirements with you to find the best possible solution for you!
Speed Financial Solutions are a highly qualified financial services provider looking after clients throughout Spain and the UK. We provide a discreet and comprehensive service to individuals, and our service is tailored to suit your needs taking advantage of tactical opportunities as they arise in respect of your investment planning. We seek innovative solutions for our clients and employ our skills, based on many years of experience, to apply tax legislation to your advantage. Our relationships are built on trust and mutual respect. We are ready to answer your questions, giving you the confidence you want when dealing with a sensitive issue such as discussing your pensions, investments and savings.
Our Principal, Andrea Speed, is a Fellow of the Personal Finance Society (PFS) which is the professional body for the financial planning community. The PFS is part of the Chartered Insurance Institute (CII), which is the world’s largest professional body for insurance and financial services in the world.
Fellowship is the highest qualification awarded by the CII and is universally regarded as the premier qualification. It is a major achievement in the financial industry and demonstrates the acquisition of skills and knowledge at the highest of levels.
Along with a Fellowship, Andrea is a CII Chartered Financial Planner specialising in Investment, Taxation and Trusts.
Please take a look at our website – www.speedfinancialsolutions.com
For further information contact us on Tel 951 315 271 or 951 318 529
We are happy to discuss your own situation in more detail. One of our advisers would be pleased to spend some time with you either in your home or at our office to review your current savings, investments and pensions, so do call to make an appointment. Our Financial Review is completely free of charge and without obligation. Follow us on Facebook for regular updates.
The contents published are not recommendations or decision aids for your investment decisions and they do not constitute any type of advice. We are not tax advisers and independent tax advice should always be sought.
Andrea J Speed FPFS (DM), M.A.
Principal, Fellow and Chartered Financial Planner
Speed Financial Solutions
28 May 2019