3 pensions, what to do?

Spring Onion

I am 40 and I currently have 3 pensions from 3 different employments;

Employment A = €10,000
Employment B = €40,000
Employment C = €25,000 (current employment)

The "agent" for Pension B keeps ringing me encouraging me to move the pension away from Company B into some fund.

I am 40 now. My questions are;

(1) Should I move Pension A and B to my current pension C?
(2) Should I up my pension payments?
(3) Should I move one of my previous pensions to a new fund to diversify?

draiochtanois

This post has been deleted.

Spring Onion

draiochtanois wrote: »

This post has been deleted.

Nope, I wish.

coylemj

I'd ask the current employer if you can bring the pensions from the previous two jobs to their fund, they shouldn't have a problem with this. The broker who is asking you to move is probably doing so because he will get commission from the fund he is proposing you move to, that commission will effectively come straight out of your pocket. That's unless he is making a case that the fund where the money is presently invested is under-performing the market.

You could just leave the money where it is but it will be easier to track your pension by consolidating them and at your age I'd make sure that they are in a 'managed' fund i.e. one heavily skewed towards equities (shares).

BazzaDP

What are your three pension pots invested in? And how much are the charges.

I'm in a similar situation but my charges for first pot are considerably lower (it was a big firm so presumably did some good negotiating on the fund charges). Unfortunately it won't let me add to that pot since I've left the firm.

2nd one is second best but also closed for new funds.

For the moment I'm sticking with three pension pots.

Then again, the hassle of keeping track of three different pensions may far outweigh the gains from slightly better pension funds. It's nice to have it all in one place.

Either way you need to know what you're dealing with. Presumably your current job insists on using their pension provider so if look at whether worth your while moving everything to that (if it allows transfers in) or ask the advisor why he's recommending the other one so much (and make sure you believe him or get a second opinion before agreeing to anything!).

NewCorkLad

Before making any decisions you need to sit down with a pensions adviser and fully review your 3 pensions looking at the charging structures and how they are invested for you.

Any adviser telling you to move your pension without looking at the whole picture isnt doing his job right.

However that said it usually is better to consolidate old pensions, making them easier to keep track of and making drawing them down at retirement a whole lot easier. Whether you combine your old pensions into a Buy-Out-Bond or transfer them into your new pension would depend on the rules and charges of your new pension.

Humour Me

I would definitely discuss your options with an advisor before deciding anything.

One thing to take into account is that the different pensions may have different retirement ages. Say your first pension has a retirement age of 60, you could take your retirement benefits and lump sum when you reach 60. If you transferred it into your current employer fund, if it had a retirement age of 65, you wouldn't be able to take the full benefits until then.

Your employer should have a financial advisor attached to their pension scheme. It shouldn't cost you anything to discuss your options with them as your employer has hired them to provide advice to their employees. It might help clarify what is best for you.

Spring Onion

Why would the adviser want me to move my pension into a PRSA? What is in it for him. He is contacting me weekly about it.

edanto

Spring Onion wrote: »

Why would the adviser want me to move my pension into a PRSA? What is in it for him. He is contacting me weekly about it.

Maybe ask him and see if you think his answer is honest?

NewCorkLad

He will be getting paid a commission for transfering the pension, however this might still be the best option for you, you need to go talk to an independent adviser to ensure this is the best choice for you.

Personally I would be looking at combining Pension A & B into a Buy-Out-Bond as they will be easier to keep track of, they will be fully under your control and you have much broader range of investment choices than with a PRSA. However as I previously said it would depend on the charging structures you are currently on.

Spring Onion

NewCorkLad wrote: »

He will be getting paid a commission for transfering the pension, however this might still be the best option for you, you need to go talk to an independent adviser to ensure this is the best choice for you.

Personally I would be looking at combining Pension A & B into a Buy-Out-Bond as they will be easier to keep track of, they will be fully under your control and you have much broader range of investment choices than with a PRSA. However as I previously said it would depend on the charging structures you are currently on.

What exactly is a buy out bond?

ANXIOUS

How long are you in your current jobs pension scheme?

Liam D Ferguson

There's no black and white answer to this. You need to do a bit of homework. If a broker or salesman is the one that's proposing the transfer, get them to do the homework for you.

Here's a list of things that you should consider before transferring from one pension fund to another.

Does the transfer affect my options at retirement?
Transfers between certain types of pension plan can have a major impact on what you can do when you retire. For example, an Occupational Pension Scheme and a PRSA have very different options available at retirement. So if you transfer from an Occupational Pension Scheme to a PRSA you're changing your retirement options. You need to understand what your retirement options are before and after any proposed transfer.

Does the transfer affect when I can retire?
Again, different options have different impacts. For example, if you have a fund in a Buy-Out Bond, you can choose to withdraw your benefits from age 50 onwards, regardless of whether or not you're working at that time. If you have a fund in a PRSA, you can only draw your benefits before age 60 if you are actually retiring from PAYE employment (not self-employment) at the time or are in serious ill-health.

Would I be better off having multiple pension pots?
Although some people like the administrative neatness of having just one pension fund, there are arguments against. For example, if you amalgamate three funds from three previous employments into your current employer's pension scheme, you can then only access those funds at one time when you retire from your current employer's scheme.

By keeping them seperate, you can "retire" them at different times. Some people like to phase into retirement, e.g. retire one pension fund at 60 and use the money to fund a drop to a 4-day week. Do the same again at 63 and drop to a 3-day week and so on. This may or may not be possible or practical for you, but it's something worth considering.

What are the charges, before and after the transfer?
Find out what charges you will pay on an ongoing basis if you choose to leave your fund where it is. Find out what the charges will be if you transfer. Compare the two. Get the charges explained to you in Euros and Cents. If someone is talking to you in jargon, tell them to stop talking jargon and explain it to you in English. If the ongoing charges will be higher after you transfer, or if there's a charge for transferring (at either end of the transaction) make sure you know why you're paying this charge and what benefit it is to you.

What are the fund choices before and after the transfer?
Find out what fund(s) your pension fund is currently invested in. Find out the choices available if you transfer. Do the fund choices suit you? Do you understand them? Don't transfer your money into something you don't understand.

In particular be aware of the risk profile of your pension funds. Get your own risk profile measured and make sure they match. Some people are disappointed with their pension fund because the risk level of the fund doesn't match their own. If you're a very risk-averse person and you're in a high risk pension fund, you'll be unhappy when it dips in value along the way. Or if you've a high tolerance for risk and you're in a low-risk pension fund, you'll be disappointed because the pension fund is only growing very slowly, if at all.

If such a transfer is being proposed to you by an intermediary, before you sign anything ask them to detail why the proposed transfer is of benefit to you making specific reference to the above five questions.