How to Manage Multiple Pensions: Rules and Advice

multiple pensions rules

Looking back, it used to be a common practice to secure a ‘job for life’ and work solidly there, with the knowledge that at the end you’d have a good pension pot waiting for your retirement.

The world is a very different place now, and the concept of a job for life is not only less likely today, it is also less relevant for most. Our growing culture of embracing change often empowers us to seek greater fortunes elsewhere.

As we move through our lives and our careers, we pick up new challenges, different responsibilities and often bewildering bundles of benefits associated to each role. What this means for pensions is that one pot can easily become many – and multiple pensions can be difficult to know what to do with. Questions such as “should I transfer my pension to my new employer” and queries about how to combine pensions are common.

For answers and to get the most out of your pension pots, read our pensions advice below.

What is a Workplace Pension?

Most employers will have provided a pension for you throughout your career. In fact, since 1st October 2012 it has been mandatory for employers to provide a workplace pension. The Government scheme means you contribute to your pension through deductions from your wages and, if you are eligible for automatic enrolment, your employer is obligated to make contributions too.

This is great news for helping individuals to start saving earlier for their retirement, but it isn’t without its problems. With the average Brit changing jobs six times in their lifetime (and millennials predicted to have 12.5 different jobs in total), keeping in control of the various pension pots you build along the way isn’t easy.

There aren’t rules against having multiple pensions, but you may find it difficult to manage multiple pensions simultaneously, which is one reason to consider consolidating them.

Should You Consolidate Your Pensions?

Reviewing pensions is rarely top of anyone’s agenda when they change jobs, and nor should it be. However, leaving multiple pension pots to run themselves until retirement is unlikely to give them the best chance to prosper either.

The pension landscape is complex, the rules change regularly, the options become broader and some older pensions do not have the flexibility to keep up. Pension charges vary significantly, as does performance and choice. All of these factors will influence how much you end up with at retirement and, in turn, what your retirement will look like.

An important question to ask yourself is: Do you know how your pensions stack up? Talking to an expert well in advance of your retirement is the best way to find out whether consolidating your pensions is the best step forward.

How to Manage Your Pensions

Most people become proactive with their pension planning when it’s too late. At Pure Wealth Management we’re often approached at retirement, yet the best time to start planning for retirement is in advance. This means you can adjust your savings to work towards a level that will provide you with a retirement you can really enjoy. Here are some of our top tips for managing your pensions:

  • It’s never too late to take stock of what pensions you have collected.
  • Dig out your old paperwork as a starting point.
  • We know paper gets lost! If this is the case, just make sure you have a list of your pension providers so your plans can be located.
  • If you do have multiple pensions, be aware they are not “frozen” – they will be invested and you are likely to be paying charges.

Using a Pension Calculator or Pension Tracing Service

When it comes to doing the research on your pensions, a pension calculator may only give you half the story. It may show how much your current savings are likely to be at retirement, or what level of annuity you could purchase, but to plan for retirement effectively it is useful to have a clearer picture than this.

Retirement Planning with Pure Wealth Management

Our retirement planning service is far more sophisticated than a pension calculator. More importantly, it is personalised for you – because everyone’s needs, expectations, health and objectives are different. We can tell you:

  • How much your pensions are costing you.
  • How your pensions are performing.
  • What your attitude to risk is and if your pensions fit with this.
  • If your pensions provide what you need to enjoy your retirement.
  • Whether it will benefit you to combine your pensions.

We can create sophisticated modelling to factor in all of your income, including:

  • Your savings
  • Pensions
  • State provisions
  • Spouses income
  • Part time income
  • Taxation

So, if you’d like to take control of your retirement savings, then get in contact with one of our specialists today.

Article By Paul Cox

December 17th, 2020

Paul is the co-founder and Managing Director of Pure Wealth Management.  With over 13 years’ experience, Paul has established himself as a well respected individual within the financial industry. Paul graduated from University in 2005 having studied Business and Human Resource Management.

Paul moved to Cardiff in 2007 to begin his journey in financial services, his first step was working as a pensions administrator with Legal and General. He was then headhunted by LV= in 2012 to create a new telephone-based retirement consultancy team. Here, Paul developed a strong technical knowledge of the retirement landscape, consulting with some of the largest and most successful advisory firms across the country, helping to shape their advise.

Paul is a qualified Independent Financial Advisor and holds a CII level 4 diploma in financial planning. He is a Pension Transfer Specialist, also holding an advanced qualification in Pension Transfers. Paul has worked with many of the industry’s leading financial advise firms, providing final salary pension recommendations.

Paul is happily married with two Sons; Jamie and Joshua. Both keep him on his toes in his spare time! Paul enjoys running, football and reading when Jamie and Joshua permit him to.

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