The new pension reforms mean that pensioners no longer have to buy an annuity and newly free money is being targeted by peer-to-peer lenders. Lending Works has introduced four new features, which were first announced in March. The platform is aiming to make peer-to-peer lending more appealing to pensioners who are looking to take control of their retirement finances.
The four features are:
-Automated monthly income tool: All lenders can now draw down a pre-selected amount on a monthly basis from the funds that are being repaid by the borrowers, creating a regular source of income straight into their bank accounts at no extra fee
-Dedicated account managers on phone & email: All new lenders aged 55+ are introduced to a named customer account manager, available on the phone and by email to help them manage their online lending dashboards
-Retirement income calculator: All existing and prospective lenders can use the calculator to forecast how much they can earn through Lending Works in place of an annuity
-1% lending bonus: All new lenders aged 55+ will receive a complimentary bonus of 1% of the money they lend during April
“More than half of our lenders are aged 55 and over, indicating a growing inclination among later-life lenders to put peer-to-peer lending into their personal finance plans. Thanks to broad customer feedback, we know exactly what pensioners need in an environment where understanding sensible money management is increasingly important.
“Since announcing these features last month, we have seen unprecedented interest from prospective lenders. To match this demand, we are adding more distribution channels to borrowers to ensure money is matched promptly and lenders start earning interest quickly.”
Lending works has always sought to market itself as one of the most secure peer-to-peer offerings. It introduced the Lending Works Shield at the end of last year, which offers the platform’s investors a three-fold protection: provision fund coverage, insurance coverage and defense against cyber-crime. On top of this about 52% of the platform’s existing lenders are aged 55 or older and so the company is well set up to take more pensioners on board.
Lending Works has forecast that it will originate £25 million in loans this year. At the beginning of the year AltFi Data predicted that the platform would originate £30m by the end of 2015. However, the graph below shows that cumulatively the platform has currently lent about £7m and if it continues at its current growth trajectory is set is hit £18m at the end of the year. The platform’s growth rates have slowed slightly this year, however, the introduction of the new pension features could boost origination volume sufficiently for Lending Works to meet its £25m target.