Penfold Pension Review
Description: Penfold is an online provider of pensions. A digital alternative to traditional pension companies, it enables users to quickly set up a pension, and manage it online or with its app. A relatively new player in the UK pensions space, Penfold was set up in May 2018, and became regulated by the Financial Conduct Authority (FCA) in May 2019. The company was founded by three technology experts who previously worked at Deloitte and Funding Circle.
Penfold, is one of the new breed of pension providers that combines tech with personal service. Via the app you can start a pension in less than 10 minutes and also talk to an expert advisor on the phone if you need help.
- Investments: Managed funds
- Minimum investment: £1
- Pension charges: 0.75%
Fees: Penfold charges 0.75% for a pension and account fees include investment management fees. Pension fees reduce to 0.4% on any amount over £100,000. Transaction fees can be up to 0.06% a year.
- Expert personal advice
- Managed pension
- £1 minimin investment
- 0.75%* low account fee
- Relatively new company
- Slightly more expensive than robbo-advisors
- App only
Research & Analysis
Penfold Pension Expert Review
In this review we:
- Give our ratings based on their nearest peers
- Tell you what we think of them after testing them with real money
- Highlight the key costs, facts and figures of their accounts
Penfold is a UK pension provider that offers a flexible pension designed for private savers, self-employed savers, those who own limited companies, and businesses. It allows customers to set up a pension online with zero paperwork.
- Related guide: Our picks of the best SIPP providers in the UK
Penfold’s goal is to make pensions easy, so it has designed a product that can be set up in less than 10 minutes. To open an account, you simply need to enter your personal details, verify your identity, and make a contribution. You can open a Penfold pension from as little as £1 per month.
The Penfold pension is like any other UK pension scheme in that your contributions are eligible for tax relief. Tax relief can be thought of as a reward from the government for saving for retirement – when you make a contribution into your pension, the government adds money for you too. Basic-rate taxpayers are entitled to tax relief of 20% on their contributions while higher-rate and additional rate-taxpayers can potentially reclaim another 20% and 25% respectively.
What can you invest in?
With Penfold, there are four main investment options.
- Lifetime. The Lifetime plan spreads your money across many different assets and automatically adjusts your investment risk levels as you approach retirement. The aim is to grow your savings more early on, before gradually shifting your money into safer investments as you get older.
- Standard. With the Standard plan, your money is invested across a wide range of investments and industries. There are four different risk levels you can choose here, depending on your risk tolerance.
- Sustainable. The Sustainable plan is designed for those who want to invest on a socially responsible basis. This fund invests in companies with the highest ESG ratings relative to their peers within each sector.
- Sharia. The Sharia plan is designed for those seeking Sharia-compliant investments. This plan excludes investments in industries such as alcohol, tobacco, pork, weapons, and adult entertainment.
It’s worth pointing out that the Lifetime, Standard, and Sustainable plans are all managed by BlackRock – the largest asset manager in the world – which uses advanced technology to spread capital over a wide range of investments. The Sharia plan is managed by HSBC Global Asset Management, which invests users’ savings across a wide range of different companies that operate in a Sharia-compliant way.
- Related guide: How to start a private pension
What are the costs?
Penfold charges one transparent annual fee for managing your pension that covers everything within its pension service. This annual fee is between 0.75% and 0.88%, depending on the plan you choose. Penfold automatically deducts a portion of your annual fee from your pension in 12 monthly instalments.
If your pension is larger than £100,000, the annual fee is reduced to either 0.40% or 0.53% (depending on the plan you choose) on the portion of your savings over this amount.
- It’s easy to set up. You can set up a pension in just five to 10 minutes.
- Several investment options. There’s a range of investment options to choose from, depending on your requirements and risk tolerance.
- You can adjust and pause your contributions if you need to.
- Investment and saving insights. The ‘Explore Your Pension’ feature gives you visibility into your investments, including a breakdown of the companies you have a stake in. You can also track how much you have saved, and the projected future value of your pension.
- Pension consolidation options. You can transfer and combine multiple old pensions into your account.
- Tax relief. As with other UK pension products, contributions come with tax relief.
- Limited investment options. Compared to a SIPP (Self-Invested Personal Pension), Penfold does not offer many investment options.
- High fees. Fees may be higher than those of competitors’ products, depending on the size of your account and the investments you select.
How does Penfold compare?
Comparing Penfold to other managed pension providers such as PensionBee and Nutmeg, there is not a lot of difference between their products. All three companies offer pensions that are easy to set up and allow you to choose between several different investment plans.
The three platforms do have different fee structures, however. With PensionBee, the annual fee is between 0.50% and 0.95% depending on the plan you choose, and fees are halved on the portion of your savings over £100,000. With Nutmeg, fees range between 0.72% and 1.14% depending on your investment plan, with lower fees for savings over £100,000. So, Penfold may be more expensive than PensionBee and Nutmeg.
Comparing Penfold to traditional pension providers such as Hargreaves Lansdown, AJ Bell, and Interactive Investor – which all offer SIPPs – the main advantage of Penfold is its user-friendly nature. With Penfold, you can set up a pension plan in a few minutes. Additionally, you don’t have to worry about managing your own investments.
On the downside, you have far less investment options with Penfold. With Hargreaves Lansdown, AJ Bell, and Interactive Investor, you can invest in UK shares, international shares, funds, exchange-traded funds (ETFs), investment trusts, and bonds. However, with Penfold, you only have a few investment plans to choose from. Penfold’s fees can also be higher than SIPP fees. Hargreaves Lansdown’s annual SIPP fee, for example, is 0.45% which is significantly lower than Penfold’s annual fee of between 0.75% and 0.88%.