Coronavirus: Martin Lewis advises on pension savings
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Pension saving takes place often over decades, and people are likely to accumulate a number of pots throughout their lifetime. However, as circumstances change and life progresses, it is easy to lose track of arrangements, particularly those which are older. But Britons are being urged to hunt down these funds to ensure they do not miss out in later life.
Indeed, it may even be better to take pre-emptive action when it comes to this issue, and this could be achieved by combining pots in a process known as consolidation.
Express.co.uk spoke to Romi Savova, CEO at PensionBee about the matter.
Ms Savova provided further insight into consolidation of pension arrangements, and how Britons could potentially stand to benefit.
She explained: “Lack of consolidation is really a problem which happens to people all over the country, regardless of what sector they are in.
“Under the current system of auto-enrolment, every time you move jobs, you probably end up leaving a pension pot behind.
“In some ways, this is good because you have some savings already, but it’s also bad, because you’re not really in control of them and understanding what they are doing for you.”
Ms Savova went on to relay her own experiences with pension consolidation, a primary motivating factor for establishing her business.
When moving jobs in 2014, Ms Savova found she had to move her own pension arrangement as well.
This, she stated, proved to be a complicated issue at the time for those who are not daily users of the pension industry.
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As such, she wanted to create a simple solution to allow people to take more control of their pension saving and feel empowered.
For those who are thinking about consolidation, regardless of the method by which they choose to do so, there are a number of potential benefits.
These could significantly help people when progressing towards the goal of retirement, and so are worthy of note.
Ms Savova continued: “The benefits around consolidation are actually numerous.
“Firstly, consolidation gives you a lot of peace of mind, as most people have pension anxiety and don’t know much about their savings.
“The second benefit is that knowing how much you have saved in total and having a balance in one place can encourage you to save more for the future.
“Otherwise, you can end up effectively sleepwalking through your working life and into retirement and only picking up the issue too late.
“One of the main benefits of pensions is that if you start early, you get a lot of bang for your buck, and your pension has a lot of time to grow.”
Another important issue to consider in this regard relates to some of the costs and charges which are often associated with pension saving.
These can vary according to the pension arrangement a person is in, however, consolidation can significantly help matters.
Ms Savova added: “Newer style pensions are generally capped by the auto-enrolment fee cap of 0.75 percent, but it doesn’t always operate properly.
“Some pensions, especially when small, can get completely charged out to zero, which is something we’ve campaigned a lot about, as they can eat into a smaller pension and erode the growth.
“For older pension plans, it isn’t uncommon to see charges of one to three percent and onwards.
“Having your pensions all in one place can help you put them all on a single fee level and most providers have pricing structures to reduce as time goes on and your pension grows.”
A final reason highlighted by Ms Savova to look at pension consolidation relates to individuals taking more control and having more choice about their investments.
As pensions are invested in often a wide range of companies, which can be both in the UK and overseas, there may be certain interests a pension saver has.
Many people, Ms Savova concluded, have strong views about the companies their pensions are invested in, and may not wish to invest with a company whose ethos does not adhere to their own.
As such, some individuals are choosing to opt for fossil free options for pension investments.
Those who wish to combine their pension pots can do so, where transfers are undertaken into a single scheme.
However, this can be a complicated endeavour and Britons may need assistance
Thankfully, this is available through financial advisers, apps such as PensionBee, and helpful guides such as those offered by the Pension Advisory Service.
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