Pension Consolidation Advice
We carry out specialist analysis and reporting on old work based and personal pension plans for clients, to assess the suitability of a potential consolidation.
Pension Transfer or Consolidation – the Opportunity
Many people have a number of old DC pensions from previous employers, as well as one or more personal pensions. Each of these plans or schemes will have different charging structures and each contain different investment funds and options. Some might be ‘high risk’ while other plans might be sitting in cash.
Ensuring you have the correct investment strategy for your needs so that the returns generated are in line with expectations, the best charging structure for your goals and a pension plan that allows you to spend your money in the most efficient way is absolutely paramount.
A pension switch or transfer to simplify and align your plans could save you thousands of pounds while reducing risk.
The following case study highlights how an individual can increase their retirement benefits by consolidating old pension plans.
This case study is based on a real life situation. We have changed the name of our client as well as the names of the two insurance companies involved, but the situation and the figures involved are accurate.
Michael is 39 and works for a media company in London. He is married and has two children. He was not a big fan of pensions and saw them as “a bit complicated”.
Stakeholder Pension with ABC Equitable£45,000
Group Personal Pension with XYZ Insurance£98,000
The advice for this client was to consolidate the two plans into one new Platform SIPP contract. Ongoing reporting on the performance of the underlying investments is now quicker and clearer for Michael. We have also provided him with online access to be able to keep track and take control of his money.
Michael now sees that the £143,000 that he had accumulated was HIS money with which he can now take control of and invest in much the same way as he does with his ISAs.
2. CLEAR ONGOING COSTS
The new plan has a transparent charging structure that actually reduced both the contract and fund manager charges
3. RISK ASSESSMENT
We carried out a comprehensive risk assessment of the investments that Michael held in his pension. We provided investment advice and Michael was invested in a portfolio that we agreed matched his attitude to risk, capacity for loss and the critical yield required to meet his objectives.
We agreed an ongoing service level with Michael that included meeting up at least once a year to review his pension investments and crucially ensure that his contract is on track to meet his desired retirement income
Even assuming the same growth rates as before, the new more efficient streamlined plan is projected to give Michael £66,500 more to spend in retirement
Ask an Expert
Contact us today to find out more and to see if you might benefit from consolidating your pensions.
Important Point to Note
Not all pensions are the same.
Defined Benefit or Final Salary Pension Schemes carry certain guarantees and benefits that are almost impossible to replicate in the personal pension environment. Such contracts should only be transferred in very rare situations as doing so would ordinarily result in a worse outcome for the individual.
These valuable employer sponsored pension schemes guarantee a level of increasing retirement income for the member, whereas the income available from personal pensions (PPS) and occupational defined contribution (DC) schemes is a direct result of how the individual manages the investment returns and charges over the term.