Reasons to leave existing pensions where they are: huge exit penalties
Some pension firms charge extremely large fees if you want to move your money to another company.
Certain firms have sometimes charged 40% of the total value of your savings, for example. The exact figure will depend on when the policy was taken out and how long it has to run before it matures. In some circumstances the fee could be more like 5%, for example.
But there is an easy way to avoid paying a very high charge to move your money. Under rules introduced in 2017, once you reach the age of 55 the pension firm has to cap its exit charge at just 1%. If you discover that any of your old policies carries a large exit penalty, it is likely to be best simply to wait until you reach 55 before you transfer your money.
However, the cap does not apply to the reductions (called market value adjustments) that insurers and pension companies may apply when you want to leave a with-profits saving plan. This is dealt with in more detail here.
If your friends would find this page useful, share it with them using the buttons below left (if you use the email button, ensure you tick "I'm not a robot" before you fill in the other fields).
Do you have a question or would you like to give feedback about this website? Email us at at email@example.com
*Links marked with an asterisk can earn money for this website: the company involved may pay us commission if you follow our link to its website or transact on it. This does not have any effect on what we write.
Nothing in this website constitutes personal financial advice. Its contents represent journalistic research and readers should ensure that any course of action they consider as a result of anything that appears on this website is appropriate to their own needs and circumstances, if necessary with the help of a financial adviser regulated by the Financial Conduct Authority. All investing involves risk: ensure that you understand the risks before you proceed.
Copyright © Richard Evans, 2019-20