By Karoliina Liimatainen on Thursday 17 May 2018
Over £500m is sitting in forgotten pension pots as careers get fractured. PensionBee has 20,000 active users who’ve combined their pensions under a new plan.
PensionBee, a London-based online pension manager, has partnered up with an employee benefits company Perkbox. Clare Reilly, the head of corporate development at PensionBee, explained the logic behind the new collaboration to Altfi.
“Perkbox is partnering with people who will help improve the financial well-being of employees. And we come from it at an angle, where people have 11-12 jobs in their lifetime now and 11-12 pension pots spread out all over the place. So, people don’t necessarily feel like they’re in control of their future. We help people gain control,” she said.
Over 500,000 employees have access to Perkbox’s services, so the partnership has potential to greatly increase PensionBee’s customer base. Currently, 85,000 people have signed up to PensionBee, with 20,000 of those accounts being active.
PensionBee has previously struck up partnerships with digital banking apps Revolut and Starling, which are popular among millennials. But the pension company doesn’t want to limit itself to young adults.
PensionBee’s typical user is 37 years old and, according to Reilly, the average age is gradually growing as the service is getting more popular. People approaching the midpoint of their careers are more likely to need PensionBee’s services than young employees in their first or second job.
This is why Perkbox, which counts about 10,000 employers as their customers, is a useful new ally helping PensionBee grow. When new customers sign up to PensionBee with Perkbox they get a £50 contribution to their pension.
PensionBee’s business idea is to consolidate the pension pots together into one plan. PensionBee, a startup of about 30 employees, doesn’t manage employees’ pension money itself. Instead, it relies on experienced industry giants BlackRock, State Street and Legal & General.
“Operating in an industry which has a low level of trust, it’s extremely important for us to offer protection to our customers. We’re asking people to move their life savings, so they need to be able to be confident that their money is protected in the event of something happening to us,” Reilly explained.
PensionBee has even prepared for a global crisis scenario where one of the giants might go under.
“If one of these large money managers would cease to exist, your money would be compensated 100 per cent with no upper limit. This is because we structured our pension plans as long-term insurance contracts. Financial Services Compensation Scheme will honour those contracts with no upper limit.”
PensionBee’s customers can choose from three different plans with annual fees ranging from 0.5 per cent to 0.95 per cent.
“This is the way we make money. But the difference with us is that we only charge one fee. It’s common across the industry to charge a number of different fees and not even disclose all of those,” Reilly said.
According to her, PensionBee can provide competitive fees because of technology.
“We’ve built a product that’s scalable to people with very small pots of money or big pots of money. We are completely cloud-based using Salesforce for our processes. We have also invested heavily in automation whereas a lot of the processes in the industry are manual, which means they don’t scale very easily and require higher fees.”
At the end of last year, PensionBee had £100m of assets under management, with a further £125m of pensions waiting to be transferred. The company will release the most recent numbers in the coming weeks.
“If things continue as they have, we should be profitable this year," Reilly said.