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Ultimate Guide to PensionBee

PensionBee – How Does PensionBee Work?

Ever wanted to aggregate all your pensions into one single fund?

In 2018, over 76% of UK employees were members of a workplace pension scheme. This was a 3% increase compared to 2017 at 73%.

Over the years, the number of employees with defined contributions increased. In fact, both the public and private sectors saw a rise in the share of employees with a workplace pension. Research shows that 90% of the public sector and 72% of private-sector employees participated in an occupational pension.

If you have several pension pots, there are benefits if you aggregate them into a single pot. First off, it can save you money if you transfer from high-cost schemes to a lower cost scheme. Second, aggregating your pension pot helps you keep track and manage your pension easily.

One of the best online services that can help you aggregate your pensions is PensionBee.

What is PensionBee?

PensionBee is an online platform that allows you to combine several pension schemes into one single pot. On a mission to help retirees enjoy a happy retirement, PensionBee gives you peace of mind by creating a pension fit for your needs.

Launched in 2014, PensionBee is a simple online system that enables you to track and manage your pension in a few clicks. Romi Savova, CEO of PensionBee and Jonathan Lister Parsons, its CTO co-founded PensionBee.

The idea of starting PensionBee originated from Romi. She had struggled to switch her pension provider for some time. Since there was no better way to consolidate pension schemes into one pot, she came up with PensionBee.

For over five years, PensionBee transformed how people consolidate, track and manage their pension. In the past, it took months to transfer pensions, but with PensionBee, people can consolidate different pensions in less than 5 minutes. In fact, you can combine your pensions via your smartphone or tablet.

Passionate about making pensions accessible to everyone, the company is FCA regulated. PensionBee pensions are currently managed by the world’s largest and experienced money managers. They include:

  • BlackRock
  • HSBC
  • Legal & General
  • State Street Global Advisors

At the time of writing, over 325,000 people registered to use PensionBee and invested more than 1.1 billion pounds.

How Does PensionBee Work?

You can combine your pensions into one pot from the comfort of your home. To do so, PensionBee made available mobile apps compatible with Android and iOS devices. You can download the apps from Google Play Store and Apple App Store.

Launch your app and sign up. Fill in the following details:

  • Legal first name
  • Legal surname
  • Email Address
  • Password

By clicking “Next”, you agree to PensionBee’s terms and privacy policy. Alternatively, you can create an account online. Visit PensionBee sign up page and fill in the details above.

The app will require you to provide other details such as your National Insurance number. Joining PensionBee is free, and you can pick any of the available plans. Alternatively, PensionBee can invest you in the Tailored plan. This is their most popular option.

With this plan, your pension funds can be automatically moved into safer assets. You need to know that it’s free to change plans.

Besides providing your National Insurance number, you can also provide your provider name. You must include details about your current employer pension. Note, PensionBee will not transfer the funds until you move jobs. Also, they’ll not move your pension unless your employer stops contributing.

Once you provide your pension details, PensionBee will begin to contact all your old providers. Switching to PensionBee takes 12 weeks, and you’ll receive regular updates each day. If they discover an old provider charges an exit fee of more than £10, they’d request permission from you before completing the transfer.

What Pension Plans Are Offered by PensionBee?

PensionBee offers a range of purpose-built pension planes. From climate-conscious investments to plans that preserve your retirement funds. There are eight plans divided into three categories, namely:

  • Higher Risk
  • Lower Risk
  • Mid Risk

Higher Risk

In this category, there are two plans:

  • Future World
  • Shariah

Future World Plan…

Designed to suit your every need, the Future World plan allows you to invest in companies planning to move to an eco-friendly economy. Managed by Legal & General, Future World plan allows you to invest in equity.

Since it’s a High-Risk plan, the reward potential is high too. If you invest £100,000, PensionBee will require you to pay an annual fee of 0.95%. If you invest £1 million, the annual fee will be 0.52%. This is usually taken from your pension pot.

The more money you invest in the plan, the lower the fees.

Shariah Plan…

With the Shariah Plan, PensionBee invests your money in Shariah-compliant companies only. An independent Shariah committee must approve all these companies and investments. Managed by State Street Global Advisors and HSBC, Shariah is perfect for people who want to invest according to their faith.

Lower Risk

In this category, you have one single plan – Preserve.

Preserve Plan…

The Preserve plan is perfect for short term investments. If you want to invest short term into creditworthy companies, this plan is right for you. Managed by State Street Global Advisors, investing in creditworthy companies preserve your money. How you may ask. The plan reduces risk.

Mid Risk

Mid Risk has five plans, namely:

  • Tracker
  • Tailored
  • 4Plus
  • Match
  • Pre-Annuity

Tracker Plan…

If you are looking for a cost-effective set and forget investment plan, we recommend the Tracker plan. The Tracker plan allows you to invest in bonds, cash and global shares. Managed by State Street Global Advisors, these investments follow the global market movement.

Tailored Plan…

As the most popular plan, Tailored is suitable for people who do not want to make regular investment decisions. With this plan, you can invest differently at different stages of your life. In fact, you can invest in safer investments as you grow older. You need to know that BlackRock manages the Tailored plan.

4PLus Planx…

This plan is ideal for people who want to access their pension near medium term. It’s also perfect for those who want their investments managed by professionals. This means the professionals will have the authorisation to invest your money in a range of assets adjusted weekly. By doing so, they help you achieve long term growth of 4% annually above the cash rate.

Match…

Match allows you to invest in a mix of assets such as equity, fixed income, property, cash and others. You can invest in the UK, Europe, North America, Japan and the rest of the world. Managed by BlackRock, it’s perfect for people who want to invest their money without the need to hold a finance degree.

Pre-Annuity…

This is ideal for people who want to invest in bonds. Bonds provide returns that correspond with the cost of purchasing an annuity. Managed by State Street Global Advisors, the Pre Annuity plan is suitable for those who want to use their pension pot to buy an annuity. It’s also excellent for those who want to experience returns matching the cost of purchasing an annuity.

How Do You Transfer Your Pension on PensionBee?

Once you create an account, provide details about your existing pension plans that you wish to consolidate. Next, PensionBee will start searching for existing pension plans. If the system finds pension plans suited for your needs, it’ll notify you only if the plan has guaranteed benefits and exit fee of over 10 pounds.

PensionBee can also combine your pensions without you selecting a plan straightaway. If you choose the Tailored plan, PensionBee will move your money automatically, free of charge. As soon as your old pensions get transferred, you’ll receive an email confirming the consolidation.

You can sign in through your mobile app or PensionBee website, anytime. From your PensionBee dashboard, you can also:

  • See the performance of your PensionBee pension in real-time.
  • View the value of your PensionBee pension
  • Pay money into your pension
  • Track your pension transfers

Once you reach 55 years, PensionBee will offer two ways to withdraw your money – Drawdown and a pension annuity.

Drawdown

Drawdown is a method where you leave your pension money invested but take cash when needed. This method is more flexible, but it does not guarantee you an income. The size of your pension pot can grow or reduce.

This may depend on the performance of your investments. Drawdown is available from age 55, and at this point, you can withdraw 25% of the pension, tax-free. The rest will remain invested, and you can withdraw as you wish. But you’ll pay income tax if you take over 25%.

Use the drawdown calculator for your pension withdrawals.

Pension Annuity

A pension annuity guarantees you life long income. Managed by Legal & General, you can take up to 25% of your pension pot once you reach 55 years. From there, you can leave the rest of your investment. Or you can choose to withdraw via drawdown.

Unlike a drawdown that does not guarantee you an income throughout your life, a pension annuity assures you of a regular income. Your annuity rate usually determines this. Besides a regular income all your life, you can leave the annuity to your beneficiaries. But you cannot change how much you receive from your pension income.

How Much Does PensionBee Cost?

PensionBee does not charge you a fee to transfer your pensions, but they do charge an annual management fee. This fee is usually deducted from your pension daily. For pensions under £100,000, the annual fee will be 0.95%. This depends on the plan you select.

If your pension pot size is £260,000, PensionBee will charge an annual fee of 0.66%. Again, this depends on the plan you select. For any pension pot size larger than £100,000, PensionBee will halve the fee.

Besides the annual fee, all investments include transaction costs related to securities. These costs include reserve tax, stamp duty and levies. Tax authorities and other regulatory bodies usually charge the levies.

You ought to know that transaction costs are separate to your annual management fee. As such, PensionBee does not make any money from them. Money managers such as BlackRock, HSBC and Legal & General disclose these costs.

PensionBee does not charge an exit fee when you leave at any point. But there is a 30-day cancellation policy. PensionBee will return your pensions to your old providers, free of charge. To do so, you must cancel your PensionBee plan within the 30 days of opening an account.

But it depends on whether your provider is willing to accept the pensions. You also have the choice of transferring your pension to a new provider, and PensionBee will not charge an exit fee.

Who Should Consider Using PensionBee?

PensionBee is open to all UK residents with an existing pension. This is regardless of an individual’s tax residency or nationality. However, tax relief on pension contributions is available to relevant UK persons.

To be eligible for tax relief, an individual must be 75 years and under. For PensionBee to recognise you as a relevant UK person, you must meet the following requirements:

  • You are or were a UK resident for tax purposes in the last five tax years
  • You have a civil partner or spouse with general earnings subject to UK tax
  • You are or were a UK resident during the current tax year.
  • You earn income in the UK subject to income tax

Currently, there are no minimum contribution amounts to your combined pension. You can save any amount you like. If you’re a sole trader, PensionBee allows you to make a personal contribution. Directors of limited companies can make employer contributions into your pension.

For your employer to make an employer contribution, the money must come from the company’s business account. To contribute, sign in to PensionBee, find the contributions tab and click on the tab.

Determine if you want to make a personal or employer contribution. Now, fill in the online form. PensionBee allows you to make one-off contributions or regular contributions via Direct Debit. To complete the process, follow the onscreen instructions.

Pros and Cons of PensionBee

Pros

  • Free of charge to transfer pension
  • Easy to use
  • User-Friendly interface
  • No exit fees
  • Mobile app to track and manage your pensions on the go
  • Excellent historical investment performance

Cons

  • Can only take out a PensionBee if combining existing pensions
  • No financial advice offered

Final Thoughts

PensionBee is an excellent option for people who want to consolidate their pensions. It transfers your old pensions and invests them into a brand new plan. You can select from the wide range of pension plans. As you grow old, you can enjoy a monthly income.

Unlike other providers, PensionBee does not lock you in with exit penalties. If they discover an existing pension provider is charging exit fee, they’ll not proceed with the transfer until you approve.

As soon as your pensions get transferred and invested, you can track and view your balance even on the go. Bank-grade encryption, permission only data sharing, and secure identity checks protect your pension.

If you’re looking for an FCA approved pension provider with no lock-in, PensionBee is for you.