Brits lose up to £800 a year holding multiple pensions – here’s how to combine yours

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MILLIONS of savers could be losing up to £800 a year if they’ve notched up multiple pensions due to frequent job moves.

The cost of administering a pension can set you back anything from £20 to £80 a year, according to new figures shared exclusively with HOAR by Hargreaves Lansdown.

We take a look at how to combine your pensions

But the financial provider’s research found that 18 to 24-year-olds are set to have 11 jobs on average over the course of their working lives, which means you could end up shelling out fees of between £220 and £880 a year.

Auto-enrolment, which was introduced in 2012, means bosses have to set-up pensions for workers between 22 and the state pension age who earn more than £10,000 annually.

And millions of people could be overpaying given the latest Office for National Statistics (ONS) show that 21.93million employees (77% of workers) now have a workplace pension.

Sarah Coles, personal finance expert at Hargreaves Lansdown said: “Each time you move job, it’s worth considering consolidating your pensions.

“This may be to move into your current employer’s scheme, or asking it to pay into one from a previous employer.

“Now that more pension providers have ditched exit fees for transferring pensions, it can be even more rewarding.”

Are there any other perks for moving my pension?

Moving multiple pensions into one pot can can also mean you reduce the one fee you do pay.

Sarah Lord, chief client officer at financial advice firm Succession Wealth said: “One of the main benefits is that consolidation can lead to lower fees and charges, as having more in your pension pot typically reduces what you have to pay.”

Simply having one pot can also make it easier for you to manage your money and help to ensure you don’t lose it.

Plus, it can make it easier for you to make decisions come retirement.

Ms Coles also points out that if you decide to buy an annuity – a guaranteed income for life – with your pension, that you tend to get a better deal on pots worth more than £10,000.

What should I watch out for?

Moving your pension should be relatively straightforward, according to Ms Lord.

Just check with the provider you’re leaving and the provider you want to join for the options.

Also ask whether you’ll be charged a fee to exit your existing provider and to join your new provider, and whether the age at which you can access your pension is different – for most people this is currently 55.

If what your pension is invested in also matters to you; ensure you’re moving to a pension that offers the choice you want.

You also need to ensure the pension you’re leaving doesn’t come with valuable added perks.

This can include a guaranteed annuity rate at retirement.

Ms Lord said: “With interest rates where they are currently, having a guaranteed annuity rate could be a huge benefit, so there is a definite case for being cautious and not making rash decisions.”