What to do with the multiple policies in your pension plan?
It’s becoming increasingly rare for an individual to remain in the same job for the duration of their career. Because of this, a growing number of people are possessing multiple policies in their pension plan. The accumulation of a new pension policy from each job can become difficult to keep track of. Aegon cited that one in five people have lost track of some of their pension savings.
The introduction of auto-enrolment pensions are a large contributor towards individuals acquiring multiple policies. Legislation has made it compulsory for employers to automatically enrol their workers into a pension scheme. The number of small pension pots within an individual’s plan have increased significantly because of this. The Department for Work & Pensions say that the number of people in workplace pension schemes has already surpassed the five million mark.
If you are in a similar situation, with a handful of policies in your pension plan – you have two options. You can either; keep your policies separate, or you can consolidate them into one plan. Aegon revealed that 67% of people would prefer to combine their multiple pension policies.
Both options have their pros and cons, and can vary massively depending on circumstances. We would advise speaking with an independent financial advisor, who will be able to recommend the best course of action for you take.
Making the right choice can make the difference in a higher income pension, or even an earlier retirement date. So it is essential that you are clued up and are sure you’re making the right decision. The best option will contrast from one person to the next, because of the different rules, guarantees and rights associated with each pension policy.
The convenience of having all of your pension policies under one roof allows you a peace of mind. You know that you won’t have to rack your brains to think about where your remaining policy is. However, downsides can include loss of employer contributions, bonus eligibility and you could be hit with an exit penalty.
Each person will face their own factors with their pension plan. Speak with a financial advisor to find a solution that best suits you. If you think that you may have some outstanding assets in a pension policy, Monimine allows you to search for them for free. Start your search today at monimine.com.
Josh Cousens – Monimine.