I wrote recently about some of the benefits of consolidating your pensions but is it actually safe to have all your pensions in one place?
After all, the money you save into pensions is likely to be a sizable sum if you are to use it to provide your income in retirement. You don’t want to be taking any unnecessary risks.
In this article I’ll explain why is it safe to keep all your pensions in one place and some occasions when you might keep them separate.
It is safe to keep all your pensions in one place
When I talk about keeping all your pensions in one place what I mean is transferring all of your different pensions to one single provider.
Over the years you have likely accumulated lots of different pensions through different employers. Unless you take action with them they will sit there with these different providers until you are ready to take money out of them (providing you are at minimum pension age).
By transferring all of your pensions to one provider your retirement fund will be easier to manage, costs could come down and you should have more investment opportunities.
Having worked with hundreds of clients, organising and managing their pensions, they are quite often unsure about having all their money with one provider.
“What if the pension provider goes bust? Is that all my retirement money gone?”
Well the first thing to remember is that your pension savings are not actually held by the pension provider. They are not sitting in the pension providers bank. Your pension savings should be invested with different investment fund managers.
These fund managers each have their own custodian and depositary meaning even the fund managers never actually see your money in their accounts. Instead the money is invested in the hundreds of shares, bonds and properties that they choose.
Should your pension provider act dishonestly or make errors in the transfer of your funds then providing you have chosen a legitimate Financial Conduct Authority registered pension you should be entitled to compensation. You can find out more on this here.
Our own RTS Investment Strategy can be used with a number of different pension provider platforms and currently invests across nine different investment funds which then invests into 13,280 global companies and 18,648 bonds.
So the only way you can lose all your money is if these 13,280 companies went bust and the 18,648 bond issuers failed to pay your money back. Probably only going to happen if it’s the end of the world!
Some of the reasons why you might not keep all your pensions in one place
So providing you choose the right pension provider and investment strategy, your pension savings should be safe in one place.
However, there may still be times when keeping your pensions separate is a good idea.
For example, you may have a defined benefit pension (also known as final salary) and this type of pension could give you a good secure income for the rest of your life. Your other money purchase pensions could then give you the flexibility to top up the income when you need it.
Other pensions may have guarantees and benefits worth keeping at least until you retire.
As always, when dealing with pensions because they are such a big part of your retirement plans it’s important you get advice to make sure you get the right strategy that is suitable for you.
You don’t know what you don’t know.
If you would like to organise your pensions and get the right investment strategy that will deliver your retirement then please get in touch for a free no obligation 15-minute call. We have carried out hundreds of pension reviews for our clients and have created many happy retirements. This could be you too!
Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.