Saving for old-age? 5 things to consider when bringing your pension pots together.

If you are one of the fortunate few to have been saving for your pension for some time, you may have ended up in the position where you aren’t quite sure where it all is. Moving employer over the years, changes in your income status or financial stability and you may have ended up with a little bit in various pots all over the place.

So how do you keep an eye on all of these pots at the same time? Keeping track can be tricky and it can be easy to lose touch with your money. Never mind the fact that having it all spread out in various schemes may not be financially efficient. If this is the case for you, it may be wise to consider consolidating your pensions. That is – bringing them all together into one big pot.

Is this a wise move for you? Consider the following for most money purchase private pensions…

  1. What are your options? 

Look at each of your pension schemes. Which have the lowest charges?  Which appears to provide a better customer service? Do you benefit from seeing a real-time online valuation? Do you receive ongoing advice in relation to any pension scheme you may hold? Are you paying for ongoing advice that you don’t feel you are receiving? Are you able to switch the underlying investment fund your pension may be invested in? Has your pension provider explained to you how they have adapted your pension in light of new pension freedom rules?

FYI, don’t take pension freedoms for granted, you may not be able to benefit from it because of the type of pension scheme you may be in and therefore it will be important to find out, as it could be a lot more costly to move your pension at a later date if you want to benefit from those very freedoms.

  1. Paperwork.

If you do decide to consolidate, there will be a lot of it. Be prepared for that. A good financial adviser will minimise this by taking all the information necessary for him/her to act early on and then liaise with each provider to gather the relevant information about each policy. A good financial adviser will dig a lot deeper than you could, looking at things like asset allocation, overall cost of a portfolio, past performance, pension features, whether the pension includes to attractive guarantees and a lot more.

  1. One way in, one way out.

So you have loads of pension pots, are you paying in all of them too? You’re probably not and therefore some pots may not be growing as efficiently as they otherwise could. Think of it this way, if you are not contributing into a pension pot you are not buying into those assets that may be undervalued and so you’d miss out when their values increase. Also when you come to retire and want to take monies out your pension pots you will need to negotiate terms with each and every pension provider you have, it could be a right hassle.

  1. Fees!

There could be fines or exit penalties for transferring funds from one of your schemes and closing it down – so do your full homework on this first. Some providers will have clauses about such things with huge charges. Not just that but you could be in a particular old plan that offers very attractive guaranteed annuity rates, rarely would you want to transfer away from one of these plans.

  1. Stability and security.

The fact that you are reading this short blog probably means you are somewhat concerned or interested in your retirement, that’s fantastic. The sooner you start contributing into a pension the better, and the sooner you start looking after your pension it’d be even better. You want some form of stability and security not just now but definitely in retirement, but we understand how precious little time we have in giving 5 minutes to everything we are requested to give 5 minutes to. So look, ask you provider the questions that have come up in this blog but also yourself some serious questions about how much income you think you will need in retirement and where you think that income will come from.

Quick point selling your pension for an annuity; which is a lifetime income, today £100,000 pension pot will buy you a lifetime income of £4,925 p.a. at the age of 65, now add that to a full state pension of £8,092 p.a., you get £13,017 p.a. Is that enough for you? Probably not.

 

Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.

5 Questions for the Potential Investor

Thinking about investing your personal finances is not a decision to be taken lightly. With so much to consider, just the thought of entrusting your hard-earned money can make your head swim! That being said, there’s no need to feel over-whelmed by making the decision to invest – with our help, you can keep your head above water and discover the right financial move for you.

Whilst taking the step of investing is actually very simple, the wisest investors and quite often those who reap the most lucrative rewards, are those who take the time to look before they leap. Whether you have the urge to jump in feet first or are hanging on to those purse strings for dear life – a few choice questions and a little reasoning will work wonders for your money’s potential as well as your peace of mind.

To help you, we have prepared 5 questions to ask yourself before you invest so that you can be a savvy investor:

1. Why should you invest?

Well put simply – if you want your money to grow and to benefit you as time goes by, investing is the best way to do that. Money that sits idle in a bank account serves little benefit beyond being some nice numbers on your bank statement each month. Investing puts your money to good use as well as increasing its value by being part of a wider project. Invested money is active money and is far more likely to benefit you in the long term than simple saving for a rainy day.

2. When should you invest?

The specific details of what you choose to invest in are up to you but the state of the market is something you should look at and consider. That being said, trying to predict a market or pick your ideal moment will probably just leave you in the starting blocks whilst the race goes on ahead of you. The thing to remember is that all markets experience short-term movement or fluctuations but it is the longer term picture that you should consider. There may never feel like the completely perfect time to invest but with a bit of research you can pick a very good time to put your money in.

3. How should you invest?

Investment markets will have down periods which is something that needs to be taken as the rough with the smooth. To minimise the risk of being adversely affected by these downturns, it may be wise to consider splitting your finances and diversifying your portfolio.  But beware: spread yourself too thinly and you may regret it due to a lack of financial reward and the pressure of keeping on top of too many assets. Choosing a few, specifically selected projects will instead enable you to keep an eye on your money, minimise risk and reap the benefits.

4. Where to invest?

A market that has a healthy long-term future is the best option. One which cannot be predicted to be a flash in the pan but instead is a more like a constant simmer. Giving your money some time to grow IS necessary and the safest, most stable option. So whilst you may be tempted to put your finances into the next big thing, a market which can demonstrate maturity and longevity is the wisest choice.

5. What to invest in?

This really is the million-pound question – and the answer lies entirely with you. After all your considerations, you need to be happy with what you are investing in and stay happy.  Consider regular reviewing your portfolio to check on the health of your investments and the decisions you made. In time, your preferences may change as your life moves forward. For instance – investing abroad may seem like a good idea when you are younger but as you approach retirement, UK investment may seem the more sensible option. Think about the needs of your family, your plans for the future and the benefits that your investments give you (if any) which are not financial.

Considering the questions above will give you a good starting point from which to make your investment choice. And as you take the step forward, you can go in to your investment being satisfied with the decision you have made. Winging it may seem like a good idea with some things in life – but choosing where to entrust your money is not one!

 

Disclaimer: The information contained within this article are provided as illustrative purposes only based on legislation at the time of publication. Nothing in this article should be construed as advice or guidance to one’s personal situation. The value of your investments may go up and down, similarly, other aspects of your wider lifestyle and financial context may impact on your objective. In a nutshell, don’t rely on blogs and the articles for personal advice, and always seek advice from a qualified professional.