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Multiple pension pots lose money PDF Print E-mail
News - Latest
Tuesday, 04 December 2012 17:25

Over 10 million people with multiple personal pension pots risk paying higher charges and receiving poorer returns by failing to consolidate their pensions under one roof, warns Investec Wealth & Investment.

Its research reveals that only one in five people holding more than one pension plans to bring their assets into one plan over the next 12 months.  

This is despite the fact the vast majority admitted to having a limited grasp of how their pensions are managed: four in five respondents said they knew either a little or very little about how their pension money had been invested across different asset classes and the level of risk taken.

More than one in five UK consumers (22%) holds more than one personal pension (i.e. excluding state pension) and almost a third of workers aged over 55+ have between two and five personal pensions, compared to 8% of people aged between 18-34. Meanwhile well over a quarter of men (28%) hold two or more personal pensions compared to 13% of women.

One of the core benefits of a Self Invested Personal Pension is the ability to better manage pension assets under one roof yet IW&I’s research has found that significant numbers of people are unaware of this key advantage.

Chris Aitken, head of financial planning at Investec Wealth & Investment, said: “By the time most professional people have reached middle age they are likely to have built up a number of different pension plans collectively containing an array of individual funds with various risk/return objectives and asset allocation models.  By transferring their pension plans into a single SIPP, they can simplify a costly and inefficient retirement planning process and the administration required to manage it.

“SIPPs offer numerous advantages to many people planning for their retirement. These include tax benefits, easy switching of funds, flexible investment options, and the ability to self-manage as much (or as little) of their pension as they like. It’s worrying that over two thirds of respondents said it was unlikely they would attempt to consolidate their numerous pensions, with the remaining 13% saying they were unsure. While SIPPs are not suitable for everyone, it’s clear that millions could be missing out on the huge advantages SIPPs can provide.”
 

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