PensionBee Review

Overview

PensionBee is a leading online pension provider in the United Kingdom, founded in 2014 by Romi Savova and Jonathan Lister Parsons. The company was established with the aim of simplifying the pension management process, allowing customers to combine their old pensions into a single new online plan. This service addresses the issues many face when they accumulate multiple pension pots from different employers throughout their careers.

PensionBee’s innovative approach to pension consolidation quickly gained traction. By making the process user-friendly, transparent, and accessible, they tapped into a market of consumers who were looking for more control over their retirement savings. The platform allows users to view their pension balance in a simple online dashboard and offers various pension plans tailored to different savings needs and risk appetites.

Since its inception, PensionBee has grown significantly – it became publicly listed on the London Stock Exchange in April 2021 and, as of 2023, boasts 223,000 customers in the UK.

How PensionBee Works

[.custom-color]Once you give them your details they do most of the legwork.[.custom-color]

There are really three things you can do with PensionBee – combine previous pensions, contribute to a pension or withdraw from a pension. Let’s take each one in turn.

Combining Pensions

Combining pensions is the service that made PensionBee famous – and indeed the one that is front and centre on most of its marketing material. Truth be told, most pension providers can do something similar for you but PensionBee has stood out by making it user-friendly, primarily online, and supported by a dedicated, knowledgable customer service agent – your “BeeKeeper” – ensuring a single point of contact for support and queries.

The process looks like this:

Sign Up: You start by creating an account with PensionBee, providing basic personal information and details about your existing pension pots.

Pension Finding: PensionBee assists in locating your old pensions. You can either provide details of your previous providers or give consent to PensionBee to search on your behalf using your National Insurance number.

Transfer Process: Once the old pensions are identified, PensionBee manages the transfer process. They communicate with the old pension providers and transfer the funds into your new PensionBee plan (more on the plans below).

During this process, you will be contacted if you’re going to incur a cost over £10 (for example in exit charges from an old pension) or if you’re going to lose some benefits. The loss of benefits mostly pops up if you have previously had a “defined benefit” pension i.e. a type of retirement plan where the benefits are calculated based on factors such as salary history and duration of employment, providing a guaranteed income for life after retirement. These are most common in the public sector and are now a positive rarity in the private sector where most people have a “defined contribution” pension i.e. pensions with variable retirement income based on how much you paid in and investment returns.

If you do have a pension with benefits that come to over £30k you will be required to take legal advice before transferring them over.

Apart from that they will try to handle everything for you – even going so far as to have robot “Armies” – physical robots that can replicate your signature from an e-signature when old pension providers (annoyingly) insist on having a wet signature to start the transfer process.

Consolidation: The old pensions are consolidated into a single PensionBee pension plan. You can choose from a range of plans that vary in investment style and risk level (we’ll go into detail about these below).

Online Management: Customers can manage their pensions online or via the PensionBee app, with features like checking their balance, estimating retirement income, and setting contribution levels.

Contribute

You can make one-off contributions or recurring direct debit contributions should you wish to.

PensionBee will also automatically claim HMRC’s pension top-up for basic rate payers. HMRC gives you 25% extra as a top-up to your contributions, up to 100% of your salary or £60,000 a year (whichever is lower). So for every £80 you pay into your pension, the government adds tax relief of £20, which is the amount of tax a basic rate taxpayer would have paid on that £100 of income. This brings the total contribution up to £100.

If you pay income tax at a higher (40%) or additional (45%) rate, you can claim back even more through your tax return. This is not automatic and has to be claimed through self-assessment.

Withdraw

The earliest age from which you can start taking your pension is 55, but this is planned to increase to 57 by 2028. At this point, you will be entitled to take 25% of your pension as a tax-free lump sum. It’s often advisable to not do this though so your funds keep growing and you have a bigger pot when you need it later in life.

When you do decide to start getting an income from your pension you have two options:

Flexible drawdown: Known as flexi-access drawdown since April 2015, this allows you to take as much money as you want from your pension pot, any time you want. If you haven’t already taken your tax-free lump sum then each withdrawal is 25% tax-free, and the rest is taxed as income. You can do this while still at work, but note that it does affect your HMRC top-ups mentioned above, so it’s best to consult a financial adviser.

Flexible annuity: An annuity is a financial product that provides a guaranteed income for life or for a set number of years. You can take your 25% tax-free lump sum and then use the remaining to buy an annuity.

There are various types of annuities available, such as lifetime annuities, fixed-term annuities, and investment-linked annuities, each with different features and options.

Plan Options

[.custom-color]There are 8 plans you can choose, but you can’t split your funds between them.[.custom-color]

PensionBee makes it pretty easy to choose a plan by cutting back the number of options. The are 8 in all and each is managed by a big name in the world of finance such as State Street Global Advisors, Blackrock or HSBC. The plans broadly fall into different risk buckets:

Low Risk:

• Preserve Fund: Aimed at those who are close to retirement and want to minimize risk, it invests primarily in bonds and short-term instruments.

Medium Risk:

• Tracker Plan: Aims to replicate the performance of the market by tracking a selection of shares and bonds globally.
• Tailored Plan: This plan automatically moves your money into safer assets as you get older. So if you have 25 years till retirement it will mostly invest in equities and property, but by the time you get to 5 years left it will mostly be made up of commodities, bonds and gilts making up your portfolio.
• 4Plus Plan: Designed to target a 4% return above inflation (before fees) over the long term, investing in a mix of assets.

Higher Risk:

• Fossil Fuel Free Plan: Avoids investment in fossil fuel producers, and companies with reserves in oil, gas, or coal.
• Impact Fund: Invests in companies with positive environmental, social, and governance (ESG) practices while aiming to generate a competitive financial return.
• Shariah Plan: Invests in Shariah-compliant companies, avoiding those that profit from gambling, alcohol, and other areas prohibited in Islam.
• Pre-Annuity Plan: Aimed at those who plan to buy an annuity, it focuses on assets designed to move in line with annuity prices so that they can be confident they can afford one went the time comes.

We do wish you could combine funds in one account to help spread the risk. This currently isn’t possible and we find it a bit restrictive.

Other Features

Pension Forecast Calculator: A really simple tool that uses sliders to project your eventual pension value against your goals. It can be accessed here.

Drawdown Calculator: This allows you to work out the amount of tax you would pay based on drawdowns of different sizes. It can be accessed here.

Fees

[.custom-color]PensionBee is very competitively priced. [.custom-color]

This is especially true considering they do so much of the legwork in pulling together your pensions.

Each plan has a different fee, but for every one the fee halves for any amount over £100,000. Here is what the fees look like and an example of how much you would be charged a year on an account that held £150,000 value:

The average annual charge for pension providers in the UK is currently sitting at 1.09%, for comparison.

Importantly, there are no exit fees – so if you don’t like the performance of a fund (they have been as a whole OK but nothing stellar) you can move to another provider.

How good is customer service?

[.custom-color]It’s fantastic.[.custom-color]

You can speak to PensionBee via phone, email or live chat. They go one step further however in assigning a dedicated customer service manager or ‘BeeKeeper’ to each customer, which helps provide a more personalised service. Feedback on these agents has generally been positive with most agreeing that they are knowledgeable and professional.

Is it safe and trustworthy?

[.custom-color]It is highly regulated and is big enough now to be listed on the London Stock Exchange.[.custom-color]

PensionBee is regulated by the Financial Conduct Authority (FCA) in the UK, which means it must adhere to strict rules designed to protect consumers. Your money with PensionBee is also protected up to £85,000 by the Financial Services Compensation Scheme (FSCS) in the unlikely event that the firm goes out of business. Moreover, PensionBee’s pension plans are managed by established investment firms who act as custodians, meaning that your funds are held separately from the company’s finances. These measures are in place to ensure that customers’ pensions are secure, even if PensionBee itself faces financial difficulties.

So in conclusion, is it a good platform?

Yes, we think so. You have always been able to consolidate your pensions, but PensionBee has taken the pain out of the whole thing.

Note:

Your money is always at risk when you’re investing.