A pension consolidation service is an agency that merges many small standalone pension schemes into one larger plan. The benefits of doing so are often superior to individual projects. The members would have to have their retirement income from the new merged scheme shared amongst several providers.
In addition, a single provider may be more capable of granting higher top-ups for those who need them because it has more funds available than separate providers could provide.”
How does pension consolidation as a service work?
A pension consolidation company will take control of your pension pot. They will then contact all the individual providers where you have money saved and request a transfer into one central holding account with the consolidation company. Once the transfer is complete, the company will manage your combined pension pot before giving you access to it when you retire.
How can a pension consolidation service help me?
There are numerous benefits to using this kind of service, which has become increasingly popular in recent years. They include:
- Lower rates of investment returns on your pension pot, and this is because all your money can now be invested in one investment fund instead of being spread across several different funds.
- A better chance of getting an increase on your pension, if you need any – depending upon the size of your combined pot, this could be as much as 30%.
- A single provider for all your financial needs – whether it’s to save for a holiday or a house deposit. If you have a mortgage with one bank and take out a mortgage with another, you will still pay interest on the first mortgage even though the second mortgage is more significant than the first.
What is the future of pension consolidation as a service?
It is expected that the number of pension consolidation systems will continue to grow as more people look to take advantage of the significant reductions in their pension pots’ investment returns.
However, it’s important to remember that this is not a free service. You’re still going to have to pay for it in one form or another, whether it’s with an upfront fee or a lump sum at the end of your life.
The future of pensions will be a competition between several different schemes, each designed to suit the needs of considered types of people. The most common type is known as a “defined-contribution” scheme. This type of scheme is funded by contributions from employers and employees and invested in stock or bond funds by an investment manager, often an insurance company or bank.
Feature of pension consolidation as a service:
- The service for pension consolidation is free; the only thing you need to do is make a phone call.
- You can have your new pension money invested into one of several options, such as a long-term investment fund that will give you better returns in the future.
- pension consolidation as a service takes care of all the paperwork and dealings with your previous providers, so you don’t need to do anything yourself.
- You can start to receive your pension money and even contribute to the scheme earlier than you would with a different plan.
- Pension consolidation as a service works for everyone, whether retiring or not.
