Can I consolidate more than one pension fund to buy an annuity?

24th May 2012

Purchasing an annuity is one of the most important decisions that you will have to make, it will provide you with an income for the remainder of your life, and once you have made a decision it’s something that you will have to stick with. Maximising an annuity is something that most people consider doing and one way that you can do this is by combining your pension funds together to give you a larger initial investment. If you are planning to do this though, you also need to take into consideration any fees and charges that you may incur.

What are the benefits of combining my pension fund?

There are many reasons why you might choose to combine your pension fund, but in general most people will combine it to give them a larger pension pot to use for an annuity investment. When you are purchasing an annuity, having a larger pension pot can open up more options to you and it can allow you to explore more options and ways to invest your annuity income.

In addition to the flexibility, combining your pension pots can also help to save you time and money. Dealing with multiple pension providers on a regular basis can be a logistical nightmare, it can involve a great deal of time and consideration, looking at where your pension income is being invested. Each of these pension funds will also require a management fee, so you may find that you are in fact paying for three or four management fees when you could simply be paying for one.

Are there any potential drawbacks?

If you are considering consolidating your pension funds then you do need to take into account any fees that you may incur or that you may be charged. You may also find that many pension funds have contract break fees and you need to take these into account before making any changes.

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