Planning For Retirement: How To Beat Pension Provider Exit Fees

Author Aventur • 23rd August 21

Don’t Let Your Pension Pot Drain Away

Did you know that some pension providers will charge you up to 10 percent of your total savings just to access your money? But that’s not the worst of it. Let’s say you have decided to consolidate your savings into one easy-access pension pot, so you wish to transfer money currently sat with one pension provider over to your new pot. Research by Citizens Advice found that the average ‘exit fee’ bill for a move like this was over £1,500!

No one wants to see their savings disappear, especially when these savings are your only guarantee of a comfortable retirement. For those aged 40 and under right now, the State Pension Age is set to be at least 70 (if not older) by the time they retire. This, coupled with increased uncertainty that the State Pension will be enough in 2051, is enough to strike fear into millennial hearts.

But there’s no need to panic. There are ways to make your pension pot work hard for you, and there are ways to avoid any nasty exit fees. Keep reading for our top tips…

Pick your pension provider carefully

If you are right at the start of your retirement planning journey, then now is a great time to start considering which pension provider might be the best option for you. But, if you’re a little further along, don’t worry! The following options still very much apply.

If you are currently employed by someone other than yourself, you and your employer will both be paying into a workplace pension. The provider of your workplace pension is usually selected for you by your employer (who will have a contract with one pension provider for all employees). Although this provider may be the right option for your employer, it may not be the best option for you personally. Thankfully, you can support your workplace pension with an additional personal savings pot. There are three main options for personal retirement savings: a SIPP, a personal pension (including stakeholder pensions), or a SSAS.

It is important to research each option carefully before deciding which is best for you. Then you can move on to selecting a provider!

If this all sounds a bit daunting to you, don’t worry. At Aventur, we are armed with industry experts and advisors, as well as advanced financial technology, to help you make the right financial decisions. Get in touch today.

Make the switch

Thanks to the aforementioned workplace pension scheme, which was rolled out as a mandatory requirement for all employers in 2018, most of us have at least one pension pot somewhere. However, if you have changed employers at some point in the past few years, there may be several small pots of money floating around in your name.

If this sounds familiar, now is a good time to consolidate your pension funds. The hardest part of this process is choosing your new pension provider as, from there, it is simply a case of gathering all the required information from your existing providers, contacting both your existing and new providers, and making the move. Once again, the likely options for your new provider would be a SIPP, a personal pension, or a SASS.

Perhaps you’ve already consolidated your pensions into one pot, but you’re not sure if the provider and/or product you are saving with right now is the best option for you. It is definitely worth reviewing your options on a regular basis to ensure you are making the most of the benefits available to you and, if there is an alternative better suited to your situation, making the switch is almost certainly worth the effort.

If we could impart just one piece of wisdom when it comes to switching and/or consolidating pensions, it would be this: Enlist the help of an expert. Making changes to your pension provider and/or product can be complicated, and making a decision without professional advice can cost you time and money.

Unfortunately, planning for your retirement is not quite as simple as we’d all like it to be. But there are ways to make it much easier. Lucky for you, our team of experts is breaking the mould when it comes to financial advice, AND they’re here to help you make the right decision for your retirement. Get in touch today.

Sources

https://www.unbiased.co.uk/news/pensions/how-to-beat-pension-provider-exit-fees
https://www.if.org.uk/2020/10/15/at-what-age-will-millennials-retire/
https://www.ageuk.org.uk/information-advice/money-legal/pensions/state-pension/changes-to-state-pension-age/
https://www.pensionsage.com/pa/Younger-savers-most-clued-up-on-pensions-as-Gen-X-lags-behind.php
https://www.ft.com/content/07b51e91-0a82-43cf-bab9-dbb56699802a
https://www.moneyadviceservice.org.uk/en/pensions-and-retirement/pension-savings-timeline
https://www.gov.uk/workplace-pensions


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