Like many workers who change jobs as they climb the corporate ladder, Paul, 42 years old, has lost track of a range of personal and work pension schemes.
In the past 15 years, he has worked for 5 different companies in 3 different countries. He has also moved house seven times.
He lives with his wife Jenny and their 2 children, Peter, 8 and Emma, 6, in Dubai. In the event of his death, some of his pensions have his wife and children nominated as beneficiaries, some have just his wife nominated and at least 2 of them were taken out before he was married so either have no nominated beneficiaries or his parents are nominated (he doesn’t quite remember).
In addition, the paperwork is as, Paul admits, “a bit of a mess”.
What Paul wanted was to pool of these pensions into one place so that it would be easier to manage them and so that he would have a clearer picture of his retirement savings. It would also allow him to clearly designate how he would like the pot to be allocated in the event of his death.
This is the step by step approach we took to meeting his objectives:
1. Track Down the Pensions
We used the Pension Tracing Service to track down the various schemes that he had.
2. Obtain Information on the Pensions
We obtained transfer values for all of the schemes. We also found out if any of the old company pensions were final salary schemes. With final salary schemes, the benefits are linked to the wage that you were earning combined with the length of service that you had with the company, there is no reliance on the stock market. The security of this benefit can offset any gain than can be obtained from consolidation.
We also looked into his personal pensions to make sure they had no additional benefits such as guaranteed annuities.
In Paul’s case, none of his company pension schemes were final salary versions and his personal pensions didn’t offer any special benefits.
3. Find a Suitable Consolidation Vehicle
We decided to use a Self Invested Personal Pension (SIPP) as a consolidation vehicle. A SIPP can suit some investors because it allows them to have full control over how their cash in invested. They have the same tax benefits as traditional pension schemes but tend to be more flexible.
We did consider a QROPS structure. However, the current uncertainty regarding these structures as well as the fact that Paul expected to retire back in the UK made the SIPP, which is UK regulated, the more suitable option in this case.
Once we set the SIPP up and transferred his old pensions into it, we were able to build an investment portfolio that matched his risk parameters and nominate his wife and children as beneficiaries.
It was important for me to have all the funds in one place and for me to have control over how they are invested. It is also much easier having all of the administration coming from one place. The fact that I can go online and monitor my whole retirement portfolio in one place, means that I shouldn’t lose track of it again.
[If you are in a similar position to Paul and would like to make managing your pensions easier, contact us and we will arrange for a qualified adviser to get in touch with you]