Transferring your personal pensions

Managing your pensions

Research suggests the average person has 12 jobs in a lifetime,¹ and over this period, many different pensions can be accumulated. It could be tempting to consolidate these pensions into one place, but before you do, our financial-planning expert Anthony Ward discusses what you should consider.

Funds transferred out of pension schemes almost tripled to a record £34.2bn in 2017,² according to figures from the Office of National Statistics. There are many reasons why people transfer their pensions, but anecdotal evidence suggests that given our busy lives where convenience and time saving is important, one of the main reasons people transfer their pensions is to consolidate them into one place to make them easier to manage.

I personally have accumulated five pensions to date, in my career, and until recently I was finding it increasingly difficult to understand firstly the charges I was paying to my various pension providers and secondly my investment options across the different pensions. I decided to review my pensions with a view to consolidating them into one arrangement that was easier to manage in line with my financial goals.

Weighing consolidation

If you have several different pension pots, there are potential advantages if you consolidate them into one:

• You can keep track of and manage your pension savings more easily when they are consolidated
• You might open up a greater choice of investments if you’re consolidating your pension pots into one flexible scheme
• You can delegate the investment decisions to your Wealth Manager, who can manage the pension capital in line with your attitude to risk and together with any other investments
• You might save money if you can transfer from higher-cost schemes to a lower-cost one

But there are potential downsides too:

• If any of your existing pension schemes offers guarantees then the implications of a transfer need to be carefully considered before transferring out of a pension and giving up the guarantee
• If you have a Defined Benefit Pension Scheme it’s important to seek specialist advice as it’s generally not advisable to transfer these schemes
• It’s important to check whether you’ll lose any valuable features and/or be charged by any of your pension providers or have exit penalties for transferring money out of their scheme

Transferring cash

If you’re transferring cash after selling your investments and maybe planning to repurchase them, remember you’ll be ‘out of the market’ for a time. That means you’ll miss out on any rise in value and on any income from these investments during that period. You’d also miss out on any corporate actions such as rights issues and on voting rights as well as any Shareholders’ benefits, for example, discounts on services, which you may not receive on the same terms when you repurchase the shares.

Transferring existing investment holdings

If you are transferring existing investment holdings there’ll be a period during the transfer when you won’t be able to sell existing investment holdings. How long this period lasts will depend on the assets you hold, but it may also be affected by how quickly the broker you’re transferring from can carry out the transfer and whether it’ll accept an order to sell while making the transfer.

There may also be delays in receiving dividends, other income and information, as well as delays to exercising shareholder concessions or receiving notification of voting rights or corporate actions, such as rights issues. These could affect your ability to respond where deadlines are shorter.

Given the possible complexities involved in deciding if a transfer is right for you, obtaining financial advice before moving your pension schemes is worthwhile, to help give you the confidence that you understand the costs, benefits and risks involved.

Consolidating your pensions can be beneficial, but only if it’s done carefully. To learn more about this and other wealth planning opportunities, please speak to your Wealth Manager, who can put you in touch with a Wealth Planner.

Barclays is not providing you with financial, legal or tax advice, so nothing contained in this article should be construed as constituting legal, financial or tax advice. Tax rules and legislation can change and the benefits and drawbacks of a particular tax treatment will vary with individual circumstances. We recommend that you take professional advice where required. You have sole responsibility for the management of your tax, financial and legal affairs, including making any applicable filings and payments, and complying with any applicable laws and regulations.