As part of our work with clients, one really important element of an overall financial plan is retirement planning. Of course, it happens quite often that clients are some way along this journey before we come into contact with them.
What we see sometimes leaves a lot to be desired… Some people think they are well on the road to a comfortable retirement. However when we investigate, we don’t see a plan, we simply see a lot of policies. These clients often don’t know what they have – they know they have “bits and pieces” of pensions and are assuming that they all add up to a satisfactory picture. Quite often, this is not in fact the case.
Sometimes of course, having lots of different policies makes perfect sense. That is, when it is part of a planned retirement strategy where it is beneficial to have multiple policies. A client may have multiple sources of income for example, each requiring a different approach. Or a client may have a specific drawdown strategy that is easily facilitated by more than one policy. Sometimes it makes sense in order to pursue a specific investment strategy.
On the other hand, we come across situations where people have multiple policies with no strategy behind them. This happens because they forget about some benefits previously built up or maybe where they get advice from multiple sources and end up with multiple policies as a result.
It always makes sense to get solid advice about your overall retirement plans, and for us to establish whether the range of policies that you have are actually serving you well. While not always the case, we often find that some consolidation of policies makes sense.
So why might you consider consolidating some of your pension policies together?
It’s easier to plan
Building a solid retirement plan begins with your aspirations and objectives in life, and then specifically focusing in on those later in life. Once you decide what your desired retirement looks like, we can help you identify the financial goals to achieve that desired retirement. We can see how much you need to save, the best structures to use and the optimal investment approach.
Once all of this is clear, we decide what is best for you in terms of policies going forwards. It’s not about what you have, we’re interested in what you need now. If having all of your existing pensions in place makes perfect sense – great! If not though, we’ll suggest a better approach that may mean consolidating some of your pensions. It all comes back to the plan.
Isn’t this a lot better than simply blindly saving money with “bits of pensions” all over the place and no end goal in sight?
A more structured investment approach
Another reason for consolidating some pensions together is to achieve a better, or easier to manage, investment approach. Once we identify the very best investment strategy to help you achieve your retirement goals, this then needs to be activated within your pension policies. It also requires ongoing monitoring, rebalancing of the asset allocation from time to time and sometimes some other tweaking. This can become very cumbersome when there are too many policies. Consolidation of policies can result in a more agile investment approach.
More cost effective
This is not always the case, but will always be considered by us when carrying out our due diligence into different potential pension plans on your behalf. Sometimes less policies can be more effective, where structures have the following features,
Higher entry investment allocations for higher amounts
Lower recurring charges over a certain asset threshold
Flat per policy / account charges
Your retirement savings are your money. While some charges will always feature, it is our job to ensure you hold on to as much of your money as possible for yourself!
These are a few headline reasons as to why it might make sense to consolidate your pensions together. To our mind though, it’s all about the plan. Get the retirement goals clear and then get the financial plan right. The pension policies are then simply a means to an end – achieving the plan. Whether that’s easier achieved with one policy or loads of them, that’s our job to tell you. Is it time for you to empty all those policies out of the drawer and come and see us, and let us build a structured retirement plan for you?
If you’d like help with any financial planning contact Carey Corbett Financial Solutions today for an appointment on 065-6893540.
Andrew Hamilton is a journalist, investigative reporter and blogger who has been working in the media in Ireland for the past 20 years. His areas of special interest include the environment, mental health and politics.