Consolidating my pensions

By THIS IS MONEY
Updated:

 

I am 48 years old and now in my company pension scheme but I have three with-profit private pension schemes: Scottish Widows with a value of £40,000; Norwich Union value £10,000 and Sun Life £2,000. I would like to retire before I reach 60, should I split these policies 50/50 between with profits and managed investments for maximum growth? BG, Sheffield

Jon Minchin, independent financial advisor with Pensionline says; There are no potential windfall benefits among your with profits policies so I would suggest you put the money predominantly in managed funds which should give you a better chance of higher growth. Of the three companies you mention, Norwich Union's charging structure and investment performance is significantly better than the others.

Consider writing to all three companies and ask for projections as to your fund values and transfer values and then getting an independent financial advisor to help you consolidate your funds with Norwich Union, where you can put the majority into managed funds.

When deciding when to retire work out how much you will get at your projected retirement age. Your current £52,000 total fund, assuming 7% annual growth, will give you a fund of £110,000 at age 60.

At current annuity levels (and they are not expected to rise significantly in the foreseeable future) that will produce an income of around 5.5% - that's about £6,000 a year. Inflation over the next 12 years could halve the purchasing power so that will be worth about £3,000 to £4,000 a year in pension.

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