Consider Pension Consolidation

Pension Consolidation-Bring your pensions in from the cold

The government estimates that people may have 11 jobs throughout their working life, so they could end up with 11 different, separate workplace pension pots. Even if you have had just a few jobs in your lifetime, it’s time to get each of the benefit plans identified, organized, and put in play for your best interest.  

If you have multiple pension schemes, find out if pension consolidation into one or two accounts would be beneficial for you. You may be paying expensive administration fees on more accounts than you need. And, you may be missing out on good investment opportunities that have a minimum you can only reach when you combine your assets. You could also be eligible for additional tax benefits. At the very least, you will not lose out on real money you’ve forgotten you’ve saved. 

Expats have specific options 

However, don’t rush into pension consolidation alone. You need a qualified financial advisor to review the details of each of your plans to make sure that consolidation doesn’t cause you to lose any benefits, incur exit fees, or get out of a plan that’s perfect for you. 

For British expats living abroad, there are typically two primary options to consider for the consolidation of your UK pensions: Self Invested Personal Pensions (SIPPs) and Qualifying Recognised Overseas Pension Schemes (QROPS). 

Consolidation into an UK SIPP is best suited for people who plan to return and retire in the UK, but also want more flexibility in the choices of underlying funds in the pension. 

Consolidation into a QROPS is better for people looking to consolidate their UK pension pots who are not planning to return to the UK and wish to invest their pension in a local currency and be free from UK tax rules. 

QROPS offers similar management advantages to a SIPP but can also offer greater flexibility with currency options and potential tax benefits for your pension. However, they may also attract additional fees and charges, such as the 25% QROPS transfer fee if you are transferring to a country you do not reside in, or outside of the EU if you currently live in the EU. 

There are, of course, rules about which plans can be combined. You can combine: 

  • SIPPs (both international and UK SIPP) 
  • Funded public sector pensions (government pensions) 
  • Final salary pension schemes 
  • Workplace/Personally defined pension schemes 
  • QROPS, if you have already transferred one or more schemes out of the UK 

These plans cannot be combined: 

  • The UK state pension 
  • Unfunded public sector 
  • Civil service pensions 

Find your pensions 

If pension consolidation sounds interesting, you’ll need some specific information to take to your financial advisor. If you keep excellent records of all of your previous employers and the savings and pension plans you contributed to, you’re all set. If, like many people, you have some gaps in your knowledge of which plans you were involved in, you’ll need to do some homework. 

First, find your National Insurance number, (NI or NINo). National insurance numbers have a combination of letters and numbers in this format: two letters, six numbers, one letter. For example: QQ 123456 C. Your NI number is very useful when tracing lost pensions. Visit HMRC to learn how to find your NI number.  

There are several ways you can track down other lost pensions. 

  1. If you’re tracing a workplace pension, you first need to contact the employer who provided it. If your employer ran a private or stakeholder scheme, they should be able to give you the administrator’s contact details. Provide your NI number along with the date you left the organization. They should then be able to tell you which administrator you need to contact. 
  1. If you’re still having problems, you can get in touch with the government’s pension tracing service, which is free, and can search a database of more than 200,000 pension schemes to find administrator contact details for you.  
  1. There is also a free service provided by an organization called The Pension Tracing Service. This is not a government website, but is run by the Better Retirement Group, a firm of independent financial advisers. The Pension Tracing Service will only tell you the contact details of the pension’s administrator. You will then need to contact the pension administrator to find out whether you have a pension and its value. 
  1. There is a new service, called Gretel, that launched in April 2022. It’s free and can help you find all types of financial assets, including lost pensions. New financial institutions are being added to the service all the time and Gretel will continue to search for your assets every two weeks. So, if it doesn’t find your pension right away, it may find it in the future. 

Access free help 

Before you see a financial adviser, make sure you take advantage of free pension guidance offered by the government-backed service Money Helper (previously known as The Pensions Advisory Service and affiliated with Pension Wise). The service includes a scheduled, free appointment where they help you understand what you can do with your pension pot and the tax implications of the various options open to you. You can then use this information to understand more about your own financial situation and the questions you should discuss with an adviser. 

Learn more and set up your appointment here 

Prepare for your meeting with your financial advisor 

  • A list of every pension plan you’ve contributed to, and identified as either a defined contribution or a defined benefit pension or a State pension. Get this information when you get the details of each pension. 
  • The amount of money contained in each of these plans. Check your pension paperwork or ask your provider how to get this information. To find out how much you have in your State Pension, call the Future Pension Centre: n 0800 731 0175 or visit Check Your State Pension Forecast on gov.UK. 
  • Note if your pension pot contains any special features, such as a guaranteed annuity rate or a guaranteed value at a certain time. Ask your pension provider if you are unsure. 

Retirement considerations 

You should also think about your financial circumstances in general and your specific plans for retirement, including:  

  • sources of income like salary, benefits, savings and investments    
  • debts and repayments you have 
  • when you want to stop working 
  • if you want a fixed or flexible income in retirement. 

You also need realistic expectations about how far your pension(s) will take you. According to Retirement Living Standards, roughly speaking, a single person needs £33,600 a year to live a comfortable retirement, while a couple who are able to share costs need £49,700. Today’s maximum State Pension is £9,339 per year. Save now accordingly. 

Now, see a good advisor 

It’s finally time to take your well-researched list of pensions, assets, debts, and retirement dreams to a great advisor and see how to make your finances and pensions work better for you.  

Check the credentials of the advisors you are considering. Of course, we at Aisa International and TailorMade Pensions provide the very best advice based on current, world-class knowledge. “For advisers to achieve and maintain our chartered financial planner status from the UK Chartered Insurance Institute (CII), we have to prove that we always work to the highest professional standards. Our advisers have to re-qualify each and every year, re-applying for the status,” explained Senior Financial Advisor, Chris Lean. “We welcome you and your desire to simplify your pensions and investments in a way that gets you on the road to the lifestyle and retirement you want.” 

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up-to-date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation. 



Susan Austin

Susan Austin is a freelance writer living in Prague, Czech Republic. Originally from the U.S., she has written and worked in many industries, including healthcare, transportation, travel and leisure, museums, education, and archaeology.

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