The rise of the job hoppers: Millennials could each have five pensions on average as employer switches become more common

“If instead they had paid 0.5% in charges and enjoyed the same 4% growth, their fund could be worth £140,000 – a third more.”

3) Retirement income flexibility

“Reforms introduced in 2015 mean savers have total flexibility over how they access their retirement pot from age 55.

“As well as still being able to buy an annuity from an insurance company, savers can take ad-hoc lump sums directly from their pot or drip-feed an income using drawdown

“The majority of people who take a retirement income now choose to keep their money invested in drawdown – but some pension schemes still don’t offer this income option.

“Switching to a new provider that offers flexible income options can allow you to build a retirement plan that suits your lifestyle.”

4) More investment choice

“One of the benefits of SIPPs is they allow savers and retirees to build an investment strategy tailored to their needs and appetite for risk.

“This often includes a choice of thousands of individual funds and stocks, as well as simpler risk-rated multi-asset funds for those who don’t want to pick and choose funds or stocks themselves.

“Some pension schemes only offer a very limited selection of in-house funds, however, restricting people’s ability to pick-and-choose the best value investments for their circumstances. Switching can therefore open up a world of choice and opportunity.”

5) Better service

“Rip-off charges aren’t the only problem with legacy pensions – service levels are also often extremely poor.

“Modern platforms, on the other hand, can offer you 24/7 access to your pension via online functionality and mobile apps.

“They also increasingly provide a wealth of information and articles designed to help you navigate your options both when saving for retirement and when you’re ready to start taking an income.”

Moving-your-pension checklist

Before you move a pension, it’s important to make sure you won’t lose money, or any valuable benefits by doing so. Here is everything you should check:

  • If you transfer out, will you be charged an exit penalty or face a market-value adjustment (MVA)?
  • Will you lose any valuable benefits? Examples include a guaranteed annuity rate, the right to take more than 25% of your fund tax free, or a pension paid to your spouse when you die
  • Does your employer pay into your existing pension, and if so, will they pay into a SIPP?
  • Does your existing pension already let you access the investments you want? How do its costs compare to those of a SIPP?
  • Do you have a final salary (also known as ‘defined benefit’) pension, which guarantees a lifelong retirement income? If so, you’re probably better off not switching. If you aren’t sure, check with a suitably qualified financial adviser

*Survey by Opinium for AJ Bell of 2,000 UK adults between 8-11 February 2022

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