How To Consolidate Pensions

August 23, 2024 06:36 PM AEST | By Team Kalkine Media

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Consolidating Pensions:

Combining multiple pensions into one can simplify management, offer more investment options, and potentially reduce fees. Auto-enrolment has increased the number of workplace pensions, with nearly 80% of UK employees now enrolled, according to the Office for National Statistics.

Considerations for Pension Consolidation:

Fees: Some providers may charge exit fees when transferring pensions.

Loss of Benefits: Consolidation might forfeit valuable guarantees, such as guaranteed annuity rates or enhanced tax-free lump sums.

Final Salary Schemes: These offer a fixed income based on retirement criteria and are less common today. Transferring out of a final salary scheme is generally not advised due to the loss of guaranteed benefits.

Employer Contributions: Transferring out of a workplace pension may result in losing employer contributions, which often match employee contributions up to a limit.

Before consolidating, consult a qualified pension adviser. For transfers involving final salary schemes over £30,000, independent financial advice is required.

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