Abundance is attempting to revolutionise the peer-to-peer pension.
The peer-to-peer lender for renewable energy projects on Saturday announced the launch of the newly minted “Abundance Pension”. All investments facilitated by the platform to date, as well as all future projects, will be eligible for inclusion within the new product. The Abundance Pension will provide full pension tax advantages, and full pensions freedoms at age 55. Abundance is touting the product as a “positive pension” – endowing investors with a unique blend of steady and uncorrelated returns, and the knowledge that their money will go towards funding projects that produce a positive social or environmental impact.
Perhaps more uniquely, the Abundance Pension is being offered via the Abundance platform itself, rather than being offered by a third party SIPP provider. The product is a single-asset SIPP, providing investors with exposure to Abundance debentures – and to Abundance debentures only. The Abundance Pension will be “marketed and fronted” by the platform itself. Abundance believes that it is the only platform in the UK to have acquired the appropriate FCA permissions for running such a model.
The Abundance Pension is being offered through a partnership with leading UK SIPP provider European Pensions Management Ltd (EPM). EPM will act as the scheme trustee and administrator, but Abundance will serve as the first point of contact for all customer facing activity. In this regard, Abundance is claiming that the new product may justifiably claim the title of the UK’s first “dedicated peer-to-peer pension”. The crucial difference between this and, say, RateSetter’s moves on the SIPP front, is that any customer who wants to hold RateSetter loans within their SIPP will need to open an account with both the platform and a third-party SIPP provider. The product within which the RateSetter holdings would sit would be a “multi-asset SIPP”, as opposed to Abundance’s single-asset, P2P only product.
In terms of the product itself, the minimum investment amount in the first year is £5,000 – which may be paid either as a lump sum or spread across the year in the form of monthly payments. Any deal that is listed on the platform may be invested in through the Abundance Pension. In the first year, Abundance will waive all charges on the pension. The platform is calling this the “lowest cost” SIPP in circulation. After year 1, customers will pay an annual management fee of 0.3% of the amount invested (with the minimum fee standing at £100 per annum).
Bruce Davis, Co-Founder and joint MD of Abundance, offered his thoughts on the product:
“We hope that this new product’s unique combination of tax relief, the diversified and uncorrelated nature of our Debentures, and the steady and attractive returns they pay from investments matching our customers’ values will make the product a significant new motivation for many people to save more towards their retirement.”
“Finally they will have easy and direct access to choose between diverse investment assets, all with a social or environmental benefit, and all paying consistent, strong and uncorrelated returns within a tax-advantaged pension wrapper.”
“The Abundance Pension launch is also a useful precursor to the arrival of the Innovative Finance ISA (IFISA) next year, which we also plan to offer. If anyone had any doubts as to how competitive and effective an ‘IFISA’ is likely to be, the Abundance Pension provides a very promising indication.”
Abundance has also published a fresh batch of research on the subject of pensions. An independent survey, conducted by OnePoll, reveals that despite 88% of adults believing it to be their own responsibility to fund their retirement, a mere 63% of those adults have some form of pension in place. Possible explanations for this disparity include the fact that 47% of people are concerned about the effects that global stock market turmoil may have on their pension, with 44% displaying active interest in pension options that would reduce their exposure to the global markets. 33% of survey respondents worry about where their pension is invested, with a mere 14% believing their pension provider to be transparent in this regard. 21% of people would invest more in their pension if they knew exactly where their funds were headed. 22% of people would be interested in a pension product that offers returns that are “solely derived” from renewable energy.
Unsurprisingly, the Abundance Pension supplies solutions on all fronts. Abundance has lent a cumulative total of £11.8m, but with just £3.3m over the course of 2015, according to the Liberum AltFi Volume Index UK. Can the groundbreaking new Pension offering get the platform’s volumes motoring?
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.