Consolidating your pension pots, to build a sizable corpus is an effective post-retirement plan. While this approach helps you manage the funds better, it also allows you to be more strategic with the investments.
Besides, it is quite common for you to be enrolled in different pension plans, based on the perks offered by the changing workplaces. However, once you consider retiring, the best approach is to house every pension plan under a common umbrella, whilst reaping the perks of better fund management and streamlined usability.
Why Rely on a Single Pension Policy?
Once retired, you wouldn’t want to stress over the residual money sitting tight in unrelated pension accounts. Therefore, getting g a unified pension scheme that ties together every loose end should be the most obvious call to make. In addition to a stress-free financial autonomy, there are quite a few other benefits of selecting a single pension plan, including;
- Consolidated funds
It is quite obvious that a single pension system aims at accumulating the spread-out funds, whilst bringing them under a canopy of sorts. This approach lets you ascertain the exact value of your assets besides helping you get rid of the stacking paperwork that goes into managing separate accounts.
- Better Managed Corpus
Pension consolidation allows your financial advisors to better manage the post-retirement corpus. This, in turn, eliminates frequent financial health monitoring and ensures a better selection of annuities and investment avenues, based on your preferences. Do you know that pension consolidation can ensure timely and regular pension payments? If not, this brochure is going to put it all in perspective for you. Pension consolidation allows you to hand over the responsibility of receiving periodic pension payments to an annuity fund provider. In essence, this means that the fund manager will take care of everything related to your pension fund, instead of you having to monitor it on a monthly basis. This includes: – Making the necessary changes on your behalf – Calculating your retirement benefits – Issuing timely and regular pension payments – Conducting regular medical examinations – Maintaining records pertaining to these matters Pension consolidation is primarily used where multiple retirement plans have been accumulated by an individual and these need to be consolidated into one platform
- Lower Administrative Fees
Maintaining separate accounts can be a costly affair, considering the accumulating administrative fees and overheads. Besides, shrewd providers are always on the lookout for sneaking additional inactivity changes and contribution overheads, as per the contract. Therefore, it is advisable to stack every open-ended pension plan into a consolidated portfolio to minimize additional charges.
- Freedom of Usage
With the concept of freedom pension floating around, where you aren’t restricted by annuity constraints, a consolidated fund is expected to be highly beneficial. According to the revisited guidelines, you can use the entire consolidated sum as per your preference.
While these benefits reiterate the importance of pension consolidation, you must consider checking for the account centric safe-guarded perks, exit fees, and the pension usage tax rates after the 25 percent threshold, before taking a call.
Author – Dan Kihato
You may also like: 5 Benefits of Using a Pension Calculator
Image Source: Pixabay.com