When you’re thinking about consolidating your pensions, it’s important that you choose a new pension provider wisely. This means doing a bit of research to find out how much they charge, what their customer service is like, and whether their pension product offers the sort of features you need.
You’ll need to consider a wide range of factors:
1. Do they offer the investment choices you want? This might be a wide fund choice, a curated shortlist of funds from which you can choose, or a range of ready-made portfolios that match your needs.
2. Do they offer all the options you need, such as regular income withdrawals, ad-hoc withdrawals, the ability to view and change your investments online or make additional contributions?
3. Are their charges transparent, simple and competitive? Some pension providers have a wide range of charges, including fees for taking income withdrawals, buying and selling investments and buying an annuity. Others have a single charge. You should consider the charges you will pay depending on how you plan to use your new pension, both now and in the future. Some providers bundle your ISA and pension investments together when calculating charges. If you also have a stocks and shares ISA, a provider that levies charges based on all your savings, rather than calculating charges for each individual product, may offer the best deal.
4. The total charges you’ll pay will usually be a combination of the cost of administration – often called the ‘platform charge’ – and the fund management charge for the funds you choose. When comparing providers, you should add these two charges together to get a more accurate picture of how much you will pay.
5. Do they charge you if you transfer away in the future? Although you may start a new pension with the intention of keeping it forever, things change. For example, your needs might change or the pension provider you choose could introduce new and unexpected charges. In these situations, having the option to move your savings elsewhere – without having to pay for the pleasure – is important.
6. What’s their customer service like? At some point, everyone has a problem they need to resolve and it isn’t immediately apparent how you might do that online. At times like these, good customer service is important to help you solve your problems quickly and easily.
7. Are they a provider that you know and trust? If you already have dealings with a financial services provider you’ll have experienced what it’s like to be a customer with them. Has that experience been good or bad?
And once you’ve made your choice...
How do you go about transferring your pensions?
Once you’ve chosen a pension that you think meets your needs, call the new provider and ask them if they offer a service that helps you consolidate your pensions. Most will write to existing pension providers on your behalf to get the necessary paperwork, meaning that all you have to do is sign and return the forms.
Once you’ve returned the forms, the transfer can then go ahead. The length of time it takes to complete this process depends on how quickly your existing pension provider issues the paperwork and then transfers your money. But the whole process usually takes anything from two to six weeks.
What about charges for transferring?
Your new pension provider shouldn’t charge you for transferring your pension to them, but there will be ongoing charges to pay for administration and fund management costs.
Your existing provider may charge exit penalties if you leave them. This is one factor to consider before you transfer. If the exit penalty is particularly large, you may be better off leaving your pension where it is.
Track down lost pensions
Before you decide whether to consolidate your pensions, you need to know exactly what products you hold and which providers you hold them with. This may sound quite obvious, but it’s easy to lose track of pensions, especially if they’re relatively small, or were arranged through an employer you may have left many years ago.
The pension tracing service can help you track them down, free of charge. If you’re not sure what you have – or where it may be – visiting their site is a good starting point.