What is PensionBee?
Launched in 2014, PensionBee took personal pensions online. They say they are on a mission to make us all pension confident by making the whole process as easy as possible. You can go online and either set up a new pension or transfer your old pension into it.
You can sign up for free and download an app to your smartphone. You’ll only be charged once you choose a plan. These come in all shapes and sizes including low risk plans for people nearing retirement who want to bank what they’ve got, or higher risk plans for people who hope for higher gains. A selection of ethical and responsible plans allow people to ensure their funds match their ethical or religious beliefs.
The site surged in popularity during the pandemic visitors up by 37% as pensions, like everything else goes online. As of July 2020, it was attracting 400,000 visitors each month.
Investing with PensionBee
Investing is quick and simple. Once you’ve signed up, you’ll be presented with a number of different plans. They come in three different risk levels.
High risk focuses on high risk/return models. Low risk plans focus on established firms with a good financial history and medium risk include their tracker plan which changes the way they invest depending on your age.
If you’re self-employed, there’s also a plan enabling you to contribute as much or as little as you want.
Compared to other providers the process feels much easier and more transparent. There is just one annual fee rather than multiple hidden fees and you can choose from a reasonable selection of funds to suit your tastes. However, others will offer more investment choice.
PensionBee Charges and Fees
Downloading the app is free. You’ll only be charged once you choose a pension plan. These are charged very simply with an annual fee which ranges from 0.5% to 0.95% depending on what plan you choose. This will come out of your pension pot and Drops by half once you’ve saved more than £100,000. The more you save the cheaper it becomes.
The fees are relatively transparent and low cost compared to other providers. Having just one fee ensures you know what you’re paying and how much. It also improves the overall fund performance because less of your pension pot goes to the provider.
PensionBee Pension Plans
Their pension plans are managed by global money managers such as BlackRock, HSBC and Legal & General. Costs vary between 0.5% and 0.95% depending on the plan.
Plans include:
- Tracker plan: Follows the market.
- Tailored: Invests money differently as you move through life.
- Fossil fuel-free: As the name implies the plan avoids toxic industries such as fossil fuels and tobacco.
- 4Plus: Aims for long term growth of 4% year on year above the cash rate by actively managing your money.
- Future world: Invests in companies which pledge to move towards an environmentally friendly future.
- Shariah: Restricts investments to companies which are shariah compliant.
- Preserve: Plays it safe with short term investments in established, credit worthy companies.
- Match: A mix of investments which follow the strategies of the wider pensions market.
- Pre annuity: Invests to provide returns broadly in line with the cost of purchasing an annuity.
These plans provide good value and decent performance, although other companies may offer a greater degree of choice or flexibility.
PensionBee Calculator
If you’re uncertain how much you should be saving, the PensionBee calculator can give you some pointers. To use it you set a retirement goal, namely how much you want to have saved by the time you retire, add your details, your savings and contributions to see projected income for any plan.
If you’re still working, therefore, it allows you to plan ahead and work out how much you should set aside each month in order to have a reasonable income when you retire. It sets expectations and help you stay on track to achieve your goals.
PensionBee Tracker Plan
The tracker plan allows you to invest in global stocks, shares and cash. It is managed by State Street Global Advisors and follows the movement of markets. It’s a medium risk option designed for long term growth and lets you diversify your investment away from the general FTSE 500 funds. It’s a nice easy click and forget plan which requires minimal effort from you and benefits from the diversification which comes from the different markets around the world.
You’ll pay an annual fee of 0.5% which will be cut in half once your savings reach over £100,000.
PensionBee Tailored Plan
We all evolve over time and so do our needs from an investment plan. The tailored plan is a medium risk plan which shifts the emphasis of your investments as you hold. Where it invests will vary depending on when you are born. For example, if you’re getting closer to retirement age it might switch investments into lower risk options to reduce the chance of you suffering from a market shock.
It is managed by BlackRock and has an annual fee of 0.70%. This reduces by half once your investments rise over £100,000 so you earn more as you save.
PensionBee Fossil Fuel Free plan
The climate crisis is concentrating everyone’s minds at the moment. Ethical and sustainable investing has gone from a niche part of the market to the mainstream. PensionBee has a number of responsible investment options, and this one is great for anyone who does not want to support industries responsible for polluting the planet.
Managed by Legal & General this plan excludes fossil fuels and tobacco companies in favour of more sustainable companies which are aligned with the goals of the Paris Climate Accords.
It’s a high-risk plan and comes with an annual fee of 0.75% which will be reduced by half for savings over £100,000.
PensionBee Future World Plan
One of the highest risk plans on PensionBee’s books is also one of the most sustainable. Managed by Legal & General it invests in those companies which actively move us towards a low carbon economy. Such companies may be riskier, but they offer the prospect of higher growth as they are more in tune with where the market is heading.
It invests only in equity with almost half of investments taking place in North America. This is a great option from someone who wants to do more than just avoid certain sectors such as fossil fuels, but to support those companies which are building the economy of the future.
The plan is at the top end of the cost spectrum for PensionBee with an annual fee of 0.95%.
PensionBee Sharia Plan
Shariah finance has been gaining in popularity in recent years as a growing Muslim population seeks out investments which are in keeping with their religious values. This plan only invests in Shariah compliant companies which have been approved by an independent Shariah committee.
The plan is positioned as relatively high risk, although there is some evidence to suggest Shariah financial products are less exposed to market shocks than others. It’s a theory which would seem to be supported by the fund’s recent performance. While most returns have dropped off sharply in 2020, its performance has remained fairly strong. It is managed by State Street Global Advisors and costs 0.95%. As with all other plans, the annual fee falls by half once savings reach more than 50%.
PensionBee Preserve Plan
A safety-first option. Managed by State Street Global Advisors, this plan makes short term investments in safe, credit worthy businesses. It’s a great option for someone who wants a low-risk plan although it may also bring lower returns. The plan is invested one hundred percent in fixed income assets which are considered more stable. It is the safest plan you can choose from in the PensionBee portfolio and only invests in firms which are financially sound with a strong track record.
It safeguards your savings against short term market shocks and is a good option if you’re approaching retirement and want to protect your gains.
The annual fee is 0.50%, which drops to 0.25% for savings over £100,000.
PensionBee Match Plan
Want to follow the smart money? Pick the PensionBee Match plan. It follows the strategies of the wider pensions industry and helps you mimic the best strategies currently being used without the need for a degree in finance.
It follows a similar trend in which people are choosing investment options which mirror the choices of professional traders.
Managed by BlackRock, the plan places your funds in a mix of assets based on the distribution of the wider pensions industry. At present, this means it is 63% invested in equity. Each month they adjust the plan so it’s up to date with the latest moves from other fund managers. In theory gives you the benefits of a low-cost passive investment approach with some of the features of active investment.
It comes with an annual fee of 0.60% which drops by half once savings rise over £100,000.
PensionBee Pre-Annuity Plan
The pensions annuity plan allows you to invest in bonds and delivers returns which are broadly in line with the cost of purchasing an annuity. It is managed by State Street Global Advisors and is a good option if you’re considering using your pension pot to purchase an annuity or any other guaranteed income product. This allows you to experience returns that aim to match the cost of purchasing an annuity in the meantime. It is almost totally focused on bonds and charges a 0.70% annual fee which is taken from your pension pot.
This fee is already highly competitive and will reduce by half when your savings grow beyond £100,000.
PensionBee Alternatives
PensionBee is one of a number of new wave pension providers using the internet to provide a more accessibly and affordable approach to investments. Compared to a traditional fund, such as Hargreaves Lansdown, you can expect lower costs and a simpler process, along with plans which have been shown to perform well on the markets. However, there may be less choice available or ability to manage the fund yourself.
Other internet pensions providers such as Nutmeg or Moneyfarm offer a similar approach. They all base themselves on simplicity and offer an ‘always on’ approach’. However, they differ slightly in form and approach. Nutmeg offers a wider set of services such as ISAs while PensionBee is mainly focused on pension consolidation.
PensionBee 2020 performance
The pandemic has been tough on pensions. Compared to the previous year’s returns are, for the most part way down. The one bright spot is the firm’s Shariah product which returned 23.16% last year, only slightly down from around 28% in 2019. Others have taken a larger hit. The Match plan, for example, is down to 4.29% from 15.82% in 2019. The Preserve plan continued to offer the lowest returns in both years. However, the good news is that the plans have largely matched the wider industry benchmark and can expect reasonable growth after the pandemic.
PensionBee 2019 performance
2019 saw pension funds round the world perform strongly. Each of PensionBee’s funds performed around or slightly above the benchmark. The Shariah fund offered a return of 28.78% mirroring a growing interest in shariah compliant finance, while the future world’s fund also performed well with 20.22%. It suggests responsible investments are already providing short term returns.
Overall, the funds’ close correlation with benchmarks supports the notion that PensionBee offers the prospect of an affordable service alongside a relatively strong and consistent track record of performance.
PensionBee Pros
- Combine all your old pensions into one
- Simple investment choices
- Clear and transparent pricing
PensionBee Cons
- You can only invest in a few funds
- Not as flexible as a SIPP
- Although fees are low they are still slightly higher than competitors
> About Our Reviewer
Tom Cropper has been writing for us since 2015. Tom is a financial journalist and his appeared in titles such as the Guardian, Euromoney and many others.