If you have multiple pensions, combining them into a single plan should reduce your administration and the amount of effort it takes to manage them. Also, you could make significant savings on your pension management charges.

If those benefits aren’t sufficient to persuade you to combine your funds, here’s another one. Combining your pensions allows you to eliminate any underperforming schemes or those losing money.

Why You Might Have Several Pension Pots.

People generally have several pension pots because they have changed employers throughout their working lives. Employers are now obliged to provide workplace pension schemes for all qualifying employees. Since 2012, they have had to enrol their workers into these schemes automatically.

Therefore, you will likely have a separate workplace pension for every job you have had. Indeed, you may have some plans that date back decades, making them difficult to keep track of and becoming misplaced or forgotten.

Finding Out if You Have a Misplaced Pension.

If you want to find out if you have a misplaced pension or track one that you are aware of, you have two options:

To use the gov.uk pension tracing service is free and straightforward. However, you are limited in the information you can get. Your other option is to use an independent company to help track old pension plans.

Many use the gov.uk service in their search. If you are considering one of these companies, you should understand your commitments before using their service.

How Can Combining Pensions Reduce Your Charges?

Pensions come with varying charges, with some schemes being completely transparent about your costs. Others are less clear.

You must understand your pension charges, as even a slight difference of 0.25% can significantly impact your pension’s value over time. By combining your pensions, you can take advantage of lower management charges and boost your pension pot.

How do I combine my pensions?

With some pension schemes, you can combine them yourself. However, you may also decide to use a regulated company. These companies will gather the information from all your pension schemes required to incorporate them into a single plan.

Many people use a financial advisor to combine their pensions, and there is a strong argument for this. Rather than just combining your pensions, a financial advisor can present your best options, helping you make the right decision. Check out Portafina. 

Why choose a financial advisor to combine your pensions?

As mentioned, a regulated financial advisor will present your best options. For instance, they will assess the advantages and disadvantages of each of your pensions, allowing you to decide if combining is your best option. 

Pension-combining companies do not offer this service. Instead, they concentrate on simply combining your pensions regardless of your existing or future charges. Therefore, combining your pensions may have no financial benefit in this case.

Of course, typically, a fee is involved when using a financial advisor. However, you should be OK with this in the long run. Research conducted by ILC-UK in 2019 concluded that those who sought professional financial advice accumulated an average of £30,000 in their pension pots more than those who did not receive such advice.

Can you combine the State Pension with private pensions?

The state pension is a government benefit paid when you reach the qualifying age. Therefore, you cannot combine this pension with your private or workplace pensions.

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