Pooling pensions?

[MaidofKent78]

I'll preempt this by saying I will be taking independent financial advice, but wondered if anyone here had experience of combining pensions.

I now have 6 pensions, including my current one: two final salary and 4 defined contribution. None of the 4 DC are big but collectively will pay out a reasonable amount, as will the two FS.

Whilst I know it's not possible to combine the FS, either together or with the DC pensions, it is possible to transfer my stopped DC pensions into my current scheme.

Can anyone talk me through the pros and cons of doing so?

The major pro I can see is all money in one pot, only one scheme, one set of details to change each time we move.

The major con I can see is all money in one pot! If it all goes tits up, I lose everything. I'm not sure I'm comfortable putting all my eggs in one basket.

Any thoughts?

I combined mine. I had 3 separate ones with not a huge amount in any of them. I then landed a job with a final salary so I moved the three in to this one. I think I paid a “penalty” but it was minimum. Also it bought me more going into the final salary which I also add about a quarter of my salary to via avcs.

DC pensions generally aren't really "all in one pot" but will be invested across a spread of managed funds which are designed to maximise growth while keeping exposure to specific ebbs and flows of different parts of the economy balanced so as to avoid big variations as different sectors boom or bust over the decades. in some DC schemes you are able to choose a spread of different managed funds. the "pension" aspect is a wrap around these investments to enable you to claim the tax benefits and unless you genuinely think the fund management of a scheme you no longer pay in to is better than the management of the currently active scheme (or has significant lower fees), there's no harm in combining all the dc pots.

if your currently active pension that you pay into from payroll is one of the final salary schemes then you certainly can merge other funds into the FS scheme but if you no longer work for the FS employer then you are right that you can't.

Is it OK to ask a question on this thread about DC pension? I've got a few small ones and would like to just take the cash from them when I'm 55, as I'm thinking the costs of moving them might wipe out their small values. Are there restrictions on this? Do I need to combine the small DC pensions then take the cash or can I just take them all out as cash leaving my large DC pension for my dotage?

You will need to check with your various pension providers Missing - some may not allow you to take them as cash so you would then have to transfer them to an arrangement that will.

@MissingMySleep I have transferred pensions in the past at zero cost. You need to find out what the actual costs are, don’t assume.

The alarm bells for me is that you’re not 55 now, and it doesn’t sound like you’re talking about taking them to retire on? In which case, check out the impact that starting to draw down your pension has on your future annual allowance for pension contributions! It massively reduces it. Taking a small amount of cash at 55 might cut off much a very tax efficient option for you thereafter.

I don’t really agree that any of your pro list are pros, really. How often do you move?! Is it really that hard to update your providers?

For me, the benefits of combining are:

• it’s unlikely all of those 4 have the same fees. So potentially, you could be in the lowest fee one.
• some providers have a lower fee for larger pots, so you may be able to benefit from that by combining

I have just got the message today that all my pensions have been combined! Each provider should tell you whether they have exit fees but if not clear you can call and ask them about transferring out. Mine were free to transfer.

Thanks for the advice all. I don't plan to move jobs that often but inevitably I se to have moved employer on average every 4 years, either through relocation or it being time for a new challenge. We've relocated twice with my husband's job in the last 5 years and there's a fairly good chance it'll happen again so keeping track of ensuring all companies are updated with changes is a bit of an administration chore!

I guess the message here is get advice!

Thanks everyone.