From the Bellpenny Nest
New starters, at most businesses, will not only be auto enrolled into their new employer’s pension scheme but they are also likely to have a pension scheme set up with at least one former employer. So the question frequently asked is, ‘What should I do with my pension pots and what options could be available to me?’
One option to consider may be consolidation, but is it always the best route to merge the plans into the new employer’s arrangement? As Nest relaxes its restrictions this month and starts to allow transfers in and out, more consolidation options become available.
However any transfers into a Nest plan would be subject to an initial charge of 1.8% as with the regular contributions. This would not be the case with most other providers’ schemes in the workplace pensions’ arena. Advice can be provided to support any transfer options but this will be at a cost to the employee. However this has been recognised by government and within limits the appropriate adviser fee can now be drawn from a pension pot to satisfy the need for one to one support.
Auto enrolment is all about the defaults that have been set by the employer, such as the default fund choice, default retirement age and default contribution levels. The days when an individual sat down and completed an application form to create their pension plan in accordance with their own retirement aspirations and consider their options have now passed. As such, it is all too easy to ignore the detail within the plan itself and whether it actually meets the policy holders needs and just to follow the prescribed route.
A regular review of all pension accounts is a prudent move with planning for retirement. Taking stock of the combined funds and assessing whether the default contribution rates are sufficient for your anticipated lifestyle in retirement, is also a realistic way of planning for the future. This way you can move towards the outcome you desire, rather than the one that is generated through following the pre-set defaults.
The Bellpenny Corporate team actively supports employers and employees with their on-going workplace pension service. As such an annual one to one pension clinic is incorporated in their annual service as a standard.