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Pension Switching and Consolidation

Retirement Planning • Pension Switching and Consolidation

Unifying Your Retirement for Greater Clarity and Control 

Modern working lives are defined by change. It is now typical for individuals to move through several jobs, each offering its own workplace pension scheme. 

Many UK professionals are left with a series of separate pension pots, each with different investment options, charges, and past employer schemes. 

A large proportion of Britons hold three or more pension pots, and many have lost track of them entirely. 

Pension consolidation brings your retirement savings together into one arrangement. For many people, this approach simplifies administration and helps unlock more effective retirement planning, potential investment cost savings, and greater peace of mind. 

However, this decision requires careful consideration, especially if you wish to protect valuable benefits or avoid losing certain guarantees. 

Understanding Defined Contribution (DC) Pensions

Defined Contribution pensions are the most common form of scheme in the UK, especially since auto-enrolment was introduced. 

The value of a DC pension depends on contributions from both you and your employer, along with investment growth (after charges) over time. 

Every job change can leave additional DC pensions with previous employers, leading to multiple, often forgotten pots. 

Transparency: Each provider has its own charging structure, investment options, and style of communication. 

Individual ownership: DC pensions are invested in your name, allowing you the right to transfer or consolidate them as you see fit. 

Why Consolidate Your Pensions?

Simpler Administration 

Managing one pension arrangement is much easier than juggling several. This means reduced paperwork, fewer statements to monitor, and a single dashboard on the Hoxton Wealth app for real-time management. 

Reducing Costs 

Every pension scheme will have its own fees. Over the years, duplicated charges can affect the overall growth of your funds. Consolidation enables you to reap economies of scale, often reducing overall fees and improving long-term outcomes. Larger pensions may access lower fee bands or premium investment choices. 

Improved Investment Control 

With all your retirement savings consolidated, you have the ability to monitor, adjust, and rebalance investments in one place, ensuring your risk profile, priorities, and ethical preferences are reflected across your portfolio. 

Simplified Estate Management 

A single, consolidated pension makes estate planning easier for your beneficiaries, reducing paperwork and potential confusion at a difficult time. 

Maximising Allowances 

When making use of pension carry-forward rules or approaching your annual allowance limits, consolidation offers a clear and straightforward way to ensure compliance. 

Considerations and Potential Risks

While pension consolidation has many benefits, it is important to weigh these against potential drawbacks: 

Loss of valuable benefits: Some older pensions may include useful features, such as guaranteed annuity rates, enhanced tax-free cash, or protected early retirement ages, which may be lost when transferring. 

Exit charges: Certain providers impose charges for transferring out, especially with older schemes. Understanding these costs is essential before making any decision. 

Differences in investment choices: Not all providers offer the same investment options, so switching could mean losing access to particular funds or features. 

Timing and market volatility: The value of DC schemes depends on market performance. Consider market conditions and your long-term objectives before making a switch. 

The Financial Conduct Authority (FCA) expects consumers to take regulated financial advice where appropriate before transferring or consolidating pensions, to ensure the decision is suitable. 

How Pension Switching and Consolidation Works

Step 1: Gather Your Pension Details 

Identify every pension plan you hold, both current and previous. Contact providers for updated balances, scheme details, and any relevant features or benefits. 

Step 2: Review Each Scheme 

Assess charging structures, investment performance, and guarantees. Take note of exit penalties. This step underpins an informed decision. 

Step 3: Decide Which Pensions to Combine 

You may choose to consolidate only certain arrangements, particularly newer, smaller, or higher-fee pensions. Schemes with valuable guarantees or features may be best kept as they are. 

Step 4: Choose a Suitable Provider 

Select your new or existing pension arrangement. Key factors include low annual management charges, a strong investment record, robust online management, and quality service. 

Step 5: Complete the Transfer 

Your chosen consolidation provider, such as Hoxton Wealth, oversees the process, liaising with existing pension providers and ensuring secure transfer of funds. Where advice is required, transfers will only proceed following a suitability assessment and your informed consent. 

Step 6: Monitor and Review 

Once the transfer is complete, track your pension's performance to ensure alignment with your retirement goals and adjust if necessary. 

The Hoxton Wealth Approach

Hoxton Wealth advisers specialise in simplifying pension consolidation for UK clients. The service covers: 

An initial review of your current schemes and benefits. 

A report comparing charges, features, and benefits, indicating what may be preserved or lost. 

Secure transfer management, reducing your administrative burden and ensuring compliance. 

Continuous access via the Hoxton Wealth app for updates and ongoing monitoring. 

Our approach prioritises: 

Transparency: Recommendations are based on clear reasoning and a thorough breakdown of costs. 

Personalisation: Each client’s circumstances are unique, so every consolidation journey addresses your specific needs. 

Compliance and security: All transfers are conducted in accordance with FCA regulations, prioritising confidentiality and data protection. 

FAQs

Take the Next Step

Bringing your pensions together can transform your retirement planning, making it simpler, more efficient, and potentially more rewarding. 

With Hoxton Wealth, you gain transparent advice, personal support, and the reassurance that your long-term financial security is a priority. 

Contact Hoxton Wealth to arrange a complimentary pension review and experience how clear and manageable your retirement plans can be. 

Important Disclaimers

Hoxton Wealth (UK) Ltd, Company No. 11180844. Registered office: 101 New Cavendish Street, London W1W 6XH. Authorised and regulated by the Financial Conduct Authority (FRN 586130). 

This page provides general information only and is not a substitute for personalised financial advice. Investments can go down as well as up, and you may get back less than you invest. Charges and fees will affect outcomes. Tax rules can change, and their effects depend on your circumstances. Some services may not be covered by the FSCS or FOS – please ask us for details. 

Hoxton Wealth UK does not advise on defined benefit pension transfers or on any pension with safeguarded benefits. 

If you are considering transferring a defined benefit scheme or another pension with safeguarded benefits, you will need to seek advice from a firm that is authorised to provide that specific service. 

Get In Touch

Get in touch to discuss your retirement plans and explore your options with Hoxton Wealth. 

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How Can We Help You?

If you would like to speak to one of our advisers, please get in touch today.

With our years of financial planning experience, we at Hoxton Wealth are committed to helping you develop your future, focusing on what’s important for you and guiding you to make informed financial decisions. 

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