Having Multiple Pensions | PKF Francis Clark
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Having multiple pensions doesn’t mean you’re getting the best returns

White piggy bank sitting on a deskIt’s not unusual for people to have a number of pensions with different pension providers which they have built up over many years usually through various periods of employment.

These pensions, however, might not be growing as much as they could be and might also be effected by high charges. They also may not be invested very well and therefore might not be getting the best returns.

Consolidating pensions is an option but one that should not be taken without professional advice as it could result in loss of valuable benefits such as enhanced tax free cash or valuable guaranteed growth rates.

For instance, if you have £50,000 in a pension at age 40 and it grows at 2% a year, by age 65 you could have £82,000. Now if that same pension grew at 5% a year, by age 65 you could have just over £169,000, over twice as much! This is because of the effect of cumulative investment growth over a long time period and serves to show how important it is to make sure your pension funds are invested well as it can make the difference of quality of life in retirement.

Assuming you retired at age 65 and wanted to take your maximum 25% tax free cash, to give you an income into your bank account of £2,000 each month after tax, you should be aiming for a total pension pot of at least £480,000. If you wanted to retire at 60, then you may need as much as £530,000 in a pension to give you the same level of income.

If you would like to make sure you’re making the most of your pension savings, contact Rachel Allen, Chartered Financial Planner and Pensions Specialist at PKF Francis Clark for a no cost initial meeting to discuss your options.

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