Consolidate my pensions

How to consolidate my pensions

Find my pensions

The decision to consolidate your pensions is made by you by authorising the transfer and combining your pots. But there are several important arguments that you need to be aware of.

The fact that you probably have multiple pensions throughout your career has probably drawn your attention to pension consolidation. Or maybe your circumstances or retirement plan have changed and you'd like to combine your past pensions into one plan. 

Combining your pensions has its benefits:

  • You feel more at ease knowing that your pensions are in one place only.
  • You could save money on management fees.
  • You have less hassle dealing with multiple pension providers.
  • You'll know exactly how much your pension savings are worth.

However, before transferring your pensions and consolidating them, it may be good to consult a financial advisor. They can provide expert advice on your finances to make well-informed decisions. If you are over 50, or you are looking to start drawing your pension benefits, you can also obtain guidance from Pension Wise, a free service set up by the UK Government. More details of this can be found further down.

Let's see how you can consolidate your pensions safely and what you need to pay attention to.

How to consolidate my pensions.

To transfer and combine your pension, you can do it yourself by contacting your pension provider and informing them of your decision. Or you can let a provider like Raindrop do the heavy-lifting for you.

If you choose to do it yourself, contact your pension providers and authorise the transfer of your pensions to one pension plan. You need to ensure that:

  • your current pension provider allows you to transfer your pension to another provider.
  • your new scheme will accept the pension transfer from a different provider.

If you choose a provider to free your hands and your time and consolidate your pensions for you, choose a trusted service that prioritises your needs such as Raindrop.

Our expert pension tracing technology can find and combine your pensions in one pension plan that you have access to 24/7 online. It's nice to know exactly where your hard-earned money is. 

Before combining your pensions, you also need to identify whether your pensions are defined contribution or defined benefit pensions. This is because each type of pension works differently, and transferring out may not make sense.

If you are unsure on what is the best option for you, speak to a financial advisor before making any decisions.

 

Combining a defined benefit pension scheme.

In a defined benefit scheme, the amount you are entitled to receive once you decide to retire depends on your earnings and the number of years you've been in that scheme. The longer you've been in that scheme, the higher retirement income you could get.

It also guarantees you a pension income for a lifetime. It is worth considering that you'd be missing out on perks such as these if you decided to transfer your defined benefit pension to another scheme.

You should also consider that, if your pot is worth more than £30,000, you'll need to seek financial advice before you make the transfer to combine your pots, which creates extra costs for you. Unfortunately, at the moment Raindrop cannot manage transfer over defined benefits scheme.

 

Combining a defined contribution pension scheme.

The way a defined contribution scheme works is simpler than a defined benefit one. You simply contribute to this pension and the funds are being invested for you. The retirement income you'll get will depend on how much you've contributed to your pot over the years and how well these investments have performed.

There are considerably fewer lucrative benefits to lose from combining your defined contribution pension pots and the consolidation process is simpler.

In fact, depending on your circumstances, it could be considerably more beneficial to you to combine your defined contribution pensions. For example, you could be saving on expensive management fees charged by your current pension provider.

Speak to a financial advisor or Pension Wise before making any decisions.

 

Pay attention to these when consolidating your pensions

We discussed above that, before combining your pensions, you should be aware of the types of pensions you save into. We also discussed how both your new and old pension providers should agree to your request to transfer and combine your pensions.

Apart from these arguments, pay additional attention to:

1) any exit fees. Ask your pension provider as a few old pension schemes charge expensive exit fees, which you could avoid.

2) Ensure that the new scheme you're transferring to has lower fees than the previous one. This way you're saving money by consolidating your pensions into a new scheme.

3) Research your new pension provider, as they may or may not be suited for the investment and retirement profile you are looking for.

4) Find out how long it will take for the consolidation process to be completed once started - the date should align with the time you’d like to retire.

5) Think about how much control you'd like to have over the investment of your savings. If you want to decide your investments yourself, you can consolidate your pensions into a Self-Invested Personal Pension scheme.

Overall, is your new pension scheme better value than the previous one?

Nearing retirement

If you are considering consolidating your pensions with a view to starting to take your benefits from them, you should consider speaking to a financial advisor, or visiting the UK Government’s Pension Wise service, to help you decide what the best option for you might be. 

If you are choosing Raindrop to find and consolidate your pensions and are nearing retirement, you will have the option to avail of the Pension Wise service before consolidating your pensions with Raindrop. You can arrange a call with them yourselves or ask us to arrange it on your behalf.

How Raindrop can help you consolidate your pensions

If you decide to let a provider help you consolidate your pensions, you've taken the first step towards a hassle-free process.

With Raindrop, your dedicated pensions assistant will find your pension pots and consolidate them into one single pension plan. You will have full visibility and access to your hard-earned money through your personal dashboard any day, anytime, anywhere.

Rest assured that your pension savings are safe and secure with us, as our funds are managed by BlackRock and Legal & General.

Please note that if you chose to combine your pensions into one consolidated Raindrop pension account, your capital is at risk as with all investments. The value of your pension pot can go up as well as down. Tax treatment depends on an individual's circumstances and may be subject to change in the future.

Start your consolidation journey with Raindrop and give yourself peace of mind. 

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