Fidelity Worldwide Investment has launched a 1% cash back offer on all pension transfers to encourage investors to bring their retirement savings together in one place.
While it is not uncommon to have lots of different pension pots, combining them could make real financial sense. Mark Till, Head of Fidelity Personal Investing, outlines five reasons why investors may benefit from consolidating their pension pots:
Ease: "Investors should be regularly reviewing their investments to ensure they are on the right track, but if their funds are spread across many institutions it can be hard to do this. Circumstances change over time, attitudes to risk and disposable income will vary as we move through life, so it is important savers review their pensions when their situation changes."
Achieving goals: "Online tools can help investors assess how much to save to meet an intended income level in retirement. Tools can also offer guidance as to the types of assets investors should have exposure to in order to help them reach their savings targets. This assistance is most beneficial when savings are viewed as a whole."
Diversification: "By having their nest egg in one place, it is simpler for investors to see the overall make up of their retirement savings and whether they are under or over exposed to a region, asset class or investment sector."
Cost: "There may be some cost advantages to consolidating assets. For those invested in a Fidelity personal pension, the larger their investment pot, the lower service fee. It is always worth reviewing charges on pensions, ISA or investment accounts to see if a better deal might be available. After all, this extra money can go towards retirement.
Cash back: "Earn money for making life easier by making the most of consolidation offers. For example, Fidelity will offer 1% cash back for transfers over £10,000 which means a saver who transfers £10,000 to Fidelity will receive £100 cash back. If they have managed to accumulate a larger pension pot of £100,000 the cash back would be £1,000**. This can be a nice extra reward on top of all the other benefits of combining all long term savings onto one fund supermarket."
Mark Till concludes: "Having pensions in more than one place can make it difficult to keep track of savings and could lead to returns being lower than they should be. To make the most of their retirement savings, investors should consider consolidating old or multiple pensions into a single pot. Having all the information in one place would allow savers to see and manage their pension more easily.
"Savers should think about spending some time getting their retirement plans into shape and in particular think about whether they could do themselves a big favour by moving or consolidating old pension pots."
Investors should be aware that some providers may charge an exit fee, so savers should always enquire about this before transferring. If there are exit penalties, check whether the new pension provider can assist. Fidelity, for example, offers up to £300 towards the cost of exit fees when you transfer from another provider.
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