Personal Finance Clinic: The Dangers of DIY Pensions

Consolidation Mistakes
The pension providers offer consolidation services to bring all of your old pensions together into a single pot. This is often a good thing to do, but older pensions are not the same as newer schemes. Sometimes, by consolidating your older schemes, you can end up losing out on some very valuable benefits.

Guaranteed Annuity Rates
Older pensions could include guaranteed annuity rates. Some can be very high, promising you a much larger regular pension income (guaranteed for life) than you could secure by shopping around. Transferring the pension usually results in this benefit being lost.

Higher Tax-Free Cash
Usually, you can draw 25% of an invested pension as tax-free cash. For some older schemes, however, the available tax-free cash can be much higher than this. Transferring into a new scheme usually means forgoing the higher tax-free cash allowance.

Market Value Reductions
When a pension is set up, a norma