5 Reasons Why You Should Transfer Your Pension | CIRCA5000

Benefits Of Transferring Pensions

Posted on 15.11.2022 • By CIRCA5000 Team7 min readBack to Blog

5 Reasons Why You Should Combine Your Pension

In the UK, the average worker is likely to have 11 jobs over the course of their professional life. If pension contributions are made during each of these jobs, a single person could end up with several pension pots to manage.

The problem with this is that it’s hard to know exactly how much you have saved for retirement because you can’t see the total sum. Luckily, you can consolidate your pensions into one pot, meaning you’ll be able to get a better overview of what you’ve saved for retirement.

What is Pension Consolidation?

First things first, it’s worth explaining what pension consolidation is. Simply put, it’s when you move your funds from one or more pensions into another scheme (or pot). It’s also known as ‘transferring’ or ‘combining’ pensions (we’ll refer to all three terms here).

What Are The Benefits of Consolidating Your Pension?

Here are five reasons why you should consider transferring your pension fund into one pot:

1: It’s easier to manage one pension pot

Keeping track of multiple pension pots can be time-consuming. In fact in the UK alone, it’s estimated that there are almost £20 billion in unclaimed pensions, affecting 1.6 million people across the country.

By transferring your pension, you’ll be able to see your savings more clearly, since you’ll only have one account to track. Some pension providers will send you just one letter annually, so it can be hard to really get an idea of how your pension fund is growing. If you set up a sustainable pension with CIRCA5000, you’ll be able to track your funds whenever you want to via the app.

2: You’ll have more control over your finances

When your old employers chose a pension provider, they probably didn’t consider how you like to invest. What’s more, many pension schemes don’t offer a wide range of investments. By putting your pension in one place with one single provider, you can keep an eye on what’s going on and make your money work for you.

You can also choose a pension provider that best suits your specific needs. You may want to make flexible contributions to your pension, for example, or make sure your pension is invested in a certain type of way (sustainably, perhaps).

3: It can reduce the fees you pay

When you have multiple pensions floating around, it’s hard to keep track of the fees you’re being charged by each pension provider. When your pensions are combined, you only need to keep on top of the fees of one single provider.

4: One pension pot simplifies retirement planning

Planning for your future shouldn’t be difficult. Once you’ve retired, you want to be able to enjoy life, do your favourite activities, spend time with the family and get out and about. We once heard it described like this: when retirement is well planned, every day can feel like the weekend.

But when you have more than one pension pot, it can be tricky to know how much you’ve actually saved for retirement. With all your funds in one place, you’ll be able to see your funds as a single lump sum. This means that you can start to work out what you’ll need for your retirement, and adjust how much you’re adding to your pension every month if you need to.

5: You know where your pension is invested

This is where we come in: our mission at CIRCA5000 is to invest in companies that change the world for the better – without compromising on profit. When you take out a pension with us, rest assured that we’ll always look for the best-in-class funds that don’t have a negative impact on our society or planet. What’s more, you can see, control and change where your pension is sustainably invested.

Things to Consider When Combining Pensions

When transferring your pension funds into one pot, you may need to think about:

  • The type of pension you have: you’ll need to find out whether you have a defined contribution pension or a defined benefit pension (you can find out more about different pension types in our guide). If you have a defined contribution pension, the amount you have depends on how much you’ve paid into the pension, how the investments have performed and the fees you’ve paid. These pensions are usually easy to transfer. Defined benefit pensions work a little differently: they often come with a retirement income, which is based on your earnings and years of employment. So, if someone has worked at the same company for many years, they may have a large sum of money tied up in their pension. You can still transfer these pensions but will need to seek independent financial advice if your pension is worth £30,000 or more.
  • Exit fees: some pension schemes apply exit charges to anyone wishing to transfer their funds out, so it’s worth checking whether or not this is the case with your pension provider. Today, charges are becoming rare, and they won’t usually be more than 1% of your savings.

Why Choose a CIRCA5000 Pension?

Our pensions are designed for investors who care about their own future, and the future of the planet. Our focus is on impact investing, and we provide a range of options to help our customers grow their money sustainably.

We are a certified B Corp, investing in companies that are actively trying to build a better future. These companies are helping to fight climate change and preserve our natural resources; they’re strengthening cyber security, and they’re creating socio-economic equality by working towards better health and educational outcomes. Find out more about our mission here.

And that’s not all. There are other benefits, including:

  • Automatic tax relief of 20% (and the potential to claim up to 40% for higher-rate taxpayers)
  • Flexibility around how you contribute – you can either do it in one go or as a monthly top up
  • Keep track of your fund and its performance
  • Access to investing resources and pension information
  • Quick and easy set-up through the CIRCA5000 app.

How to Transfer Your Pension with CIRCA5000

Consolidating your pension is easier than you think with CIRCA5000.

Just take the following example from one of our customers Donna, who’s based in Liverpool.

Donna had lots of jobs and changes of address. She used our free tracing service to reclaim £40,000 in lost pensions for her retirement fund, consolidating these savings into one pot. Donna was able to monitor her funds using the CIRCA5000 app, and properly plan for her retirement. She told us:

"Honestly…[the app] was just so simple to use. I’ve worked with computers for years, but I would call myself a technophobe. But the app was so easy to use – really easy to keep track of – and I just loved it."

To get started, you’ll need to open a CIRCA5000 pension.

Once you’ve opened a pension with us, follow the steps below in the app to transfer your pension. For more information, visit our transferring pensions page.

  • In the app, click ‘Transfer In.’ Remember, you’re choosing to transfer the pensions we might find to CIRCA5000.
  • Enter your existing pension details. If you don’t know these, don’t worry. You can tell us about your old jobs and we’ll find your old workplace pensions – we have a dedicated tracing team who can do this for you. If you know your dates of employment, let the team know; this can be used to source your pension information.
  • We’ll reach out to your providers or past employers. Please note that this can take a few weeks. We may also need you to sign a letter of authority so that we can act on your behalf. It’s really straightforward and we’ll keep you updated throughout the process.
  • See your pension details in the app. Once we’ve found your pensions, you’ll be able to view them all in one place and combine them into a single CIRCA5000 pension.

Our customer service team are on hand to help if you have any questions. Just email them at hi@circa5000.com or get support using the in-app chat feature. Alternatively, you can visit our support page.

Disclaimer

When you invest, your capital is at risk. You should carefully consider whether opening a CIRCA5000 pension or transferring your old pensions is right for you. Please note that tax rules and reliefs depend on your personal circumstances and may change. CIRCA5000 does not provide any financial or tax advice, and you are responsible for your own tax reliefs/payments. This article does not represent financial advice. Your investments and the income from them can go down as well as up.

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