Merging pensions safely can be a tricky exercise, however, while it seems overwhelming, there are ways to execute the task and protect your assets at the same time. As an employee in my 20s, I've worked for multiple employers, meaning there's a high chance I will have paid into more than one pension throughout those years of employment. Merging, or more commonly known in the financial industry as consolidating, all your acquired pensions can make it much easier to monitor and keep track of savings. Doing this will make putting together a retirement plan much easier and it could ensure you're getting yourself the best deal, which is ultimately what we all deserve after a life of service to work. To make sense of it all, for both myself and for HELLO! readers, I spoke to Tim Sheppard, a top expert from the Money and Pensions Service.
How to merge my pensions
Getting started with the process requires you to gather all your pension details in one place. It might help to make a list of all of your pension providers, the account numbers attached to them and the value of each pot as it currently stands. This information can usually be found on your pension provider's online portal.
Next, it is best to start checking out all available options. In most cases, there will be an option to transfer most workplace and personal pensions into one plan. This can be done either with your current employer’s scheme or into a new personal pension. Many providers will handle the transfer process for you once you give them permission to do so. One thing to be mindful of before choosing a pension option is to check their exit fees and any other valuable benefits that might be on offer depending on the plan.
© Getty ImagesOnce that's all decided, you've done your due diligence and are happy with your choice of scheme, all that's left to do is to contact the provider and set the wheels in motion. The rest is up to them as they will help you arrange the transfers and keep you in the loop as your application progresses. Be prepared for a bit of a lengthy process as it usually takes a few weeks, depending on the providers involved.
Should I merge my pensions?
To merge, or not to merge, that is the question! Policy and propositions manager at the Money and Pensions Service Tim Sheppard explained to HELLO!: "Consolidating old pension pots can make life easier by reducing paperwork and potentially lowering fees - but it’s important to check what you might be giving up. Some older schemes include valuable features, such as guaranteed annuity rates or a protected pension age, which you could lose on transfer."
He continued: "Do not assume your largest pension should be the destination for your other pots either. Shop around by comparing charges, including any exit fees, and check whether consolidating your current workplace pension affects your employer’s contributions. Before making any decisions, you can get free, impartial guidance on your options at MoneyHelper.org.uk."
© Getty ImagesHow to find lost pensions
Keeping track of old pensions can be difficult, especially if you're someone who has moved around companies and homes quite a bit. Finding these lost pensions can be an easy process though, if you make use of the government's free Pension Tracing Service. It will help to reconnect you with forgotten savings that are floating around and collecting dust. The tool can be used to search for the contact details of your old workplace or personal pension providers. To make use of the service, you will need to know the name of your previous employer or pension scheme.
The only thing to note is that the service won't be able to tell you how much you have saved. However, it can give you the information of who to contact to learn about your current pension pot. In addition to using the tool, it is also worth checking your old payslips, P60s, or employment records for any pension references that can make the search easier. According to Money Helper, there are four steps involved in finding your old pensions:
1. List all the places you've worked
2. Find your pension provider’s name
3. Use the Pension Tracing Service
4. Contact the pension provider to trace your pension
Before merging any pension, be cautious of unsolicited calls or texts which often promise "guaranteed high returns" or "early access" to your cash. A legitimate financial advisor will never cold-call you, so be aware of any scams circulating at the time of inquiry.
