It has now become commonplace to keep track of your pension online, or via an app. There are plenty of different options to choose from. So how do you know what’s the best option for you?
Two of the big names in pension consolidation are PensionBee and Nutmeg. Both promise to offer you flexible control over various pensions you may have trouble keeping track of. But what are the main differences between the two? And is there anything you should be keeping in mind before choosing one over the other?
In this guide we’ll be comparing them both, before drawing everything together in a quick summary. Read on to find out more!
PensionBee Vs Nutmeg: A Quick Summary
- Both PensionBee and Nutmeg offer you an always-on service. This means you can transfer, combine, contribute to, and withdraw from your pension pots online at any time.
- However, while PensionBee is primarily focused on pension consolidation, Nutmeg appears to offer more services. For example, you can also manage ISAs and general investments through the latter, but not through the former. PensionBee will, however, let you invest your contributions in stocks and shares depending on the plan you opt into.
- Both PensionBee and Nutmeg allow you to plan your investments in advance with smart projections. PensionBee has a simple calculator, while Nutmeg has advanced risk projections.
- Both services will let you withdraw your pension from the age of 55 or older.
- Both PensionBee and Nutmeg offer different service plans, though Nutmeg’s approach appears to be a little more in-depth.
- Both systems allow you to benefit from the lucrative 25% government top-up.
- Nutmeg allows you to invest in your pension(s) through managed or fixed channels, as you prefer. To be able to use the fixed option, you’ll need to invest through the service’s ISA or general portfolio services.
- PensionBee has no minimum investment limits set. With Nutmeg, you will need to invest at least £500 to get started. This, according to industry sources, has decreased from £5,000 minimum in recent years.
- Both services claim to offer ease of use and setup. However, even from a quick glance, it is clear that PensionBee may be preferred by those looking for a more casual, straightforward management service. Nutmeg, however, offers a lot more options, such as its investment opportunities.
Let’s take time to look at both PensionBee and Nutmeg in a little more detail.
What is PensionBee?
PensionBee is an online pension consolidation engine. It’s marketed towards people who may have difficulty keeping track of their private and public pensions, and who therefore need a helping hand. Providing you transfer at least one pension over to the service, you can start making contributions with a view to withdraw once you are at least 55 years of age.
PensionBee has a calculator system where you can analyse how much you’d like to save for, and how much you’d need to contribute to reach your goals. The service will also let you take 25% of your pension away without tax, and you will also benefit from government top-ups while paying in. The service has a further calculator which will help you to understand drawdown, as and when you’d like to get started.
PensionBee is run by ‘Beekeepers’. There are customer success managers who guide customers through the sign-up process and are always on hand to answer any questions, although they cannot give advice. PensionBee customer’s pensions are invested and managed by some of the world’s biggest money managers such as BlackRock, Legal & General, HSBC and State Street Global Advisors.
There aim, it seems, is to break down the clunky and cluttering pensions of old, instead collaborating them into a simple, singular digital standard. It’s likely to be very appealing to a lot of people, particularly young adult savers who want to invest in their future at their convenience.
But how exactly does PensionBee work, and how can you expect to get started? Let’s break things down a little further.
How Does PensionBee Work?
PensionBee is free to join, though you will need to pay an annual fee once you choose to start managing your funds through the service. We’ll take a look at this a little further down.
PensionBee will ask you a series of information with regard to your existing or previous pensions. These may be public or private, and from a variety of different providers and companies. PensionBee makes a point of letting you know, too, that they work with a variety of leading, global names in money management and pension services.
What the service also offers is a pension check. This means that Beekeepers will be able to scan a national database for information on your pension(s) based on your employment history. This is a handy service which will appeal to anyone who may not have all the paperwork to hand.
Once you’re happy for PensionBee to go ahead, you can ‘confirm’ your details, and they will make all the necessary contacting of your existing pension providers. What the service also does is look out for exit fees on pension contracts and warns you about them before they consolidate anything.
Using The Service
Once you’re happy to go ahead, you can start by choosing any one of seven plans available. These plans are set up to allow you to invest in various companies, stocks and shares, depending on where you’d like your money to go. Most people apparently opt for the ‘tailored’ approach, though you can choose set portfolios such as 4Plus, which works on growing your investment by 4% each year.
You can access PensionBee at any time, and you can also use the app and online service to contact Beekeepers for advice.
PensionBee have also recently introduced a new retirement planning tool which has three key elements:
- Retirement Planner – this lets you see the level of savings you might need based on long-term goals.
- Transfer and Contribution breakdown – a snapshot of what’s in a your pension pot, based on how much you’ve transferred, contributed and received from HMRC in the form of tax top ups.
- Past Performance – a chart showing the growth of your pension pot over time.
What Fees Do PensionBee Charge?
PensionBee charges one fee per year, based on the plan you choose, and the amount of money you have invested. The fees can range between 0.5% and 0.95% per year, and this will vary depending on your plan – so do be sure to shop around and compare. What the service also offers is the option to halve your annual fee if you have more than £100,000 in your pension pot. You can easily calculate how much you can expect to pay annually through the PensionBee website before you get started.
Fees are, handily, withdrawn from your PensionBee pot each year, and you will always be informed how much you can expect to pay, and when it will be deducted.
There is, however, a withdrawal fee which applies if you drawdown within a year of signing up and using the service. PensionBee will charge you £480 as a flat fee to depart the service in your first 12 months. Therefore, it may be worthwhile sticking with the service for a longer period to get your money’s worth. It is worth noting that, otherwise, you won’t expect to pay anything for a simple drawdown, as and when you’d like to get started.
Can You Transfer Any Pension into PensionBee?
PensionBee is open to you transferring the vast majority of pensions into its service. However, there are a few circumstances under which you may not be able to make a transfer. For example, certain government pensions, such as those belonging to teachers, armed forces personnel, and those in the police, aren’t legally open for transferal. It is worth consulting a Beekeeper regarding this if you are concerned.
You can also transfer ‘defined benefit’ pensions into PensionBee, though the service advises that you will need to consult a financial advisor before you do. This is a legal requirement if you have £30,000 or more to move over. What PensionBee does confirm, however, is that they will arrange all paperwork for you to review ahead of time.
Otherwise, you won’t be able to invest pensions based outside of the UK. A fantastic bit of flexibility in the terms, however, states that you can even move pension pots over which are already in drawdown.
PensionBee Investment Style
PensionBee appears to favour diversity in investment. What’s more, it presents investment opportunities in a straightforward manner. Its plans are neither too simple nor too complicated, which means seasoned investors are unlikely to be put off. However, for anyone who may be new to investing at all, the approach here is very straightforward and appealing.
You can completely manage your investments and pension pot whenever you like, and from wherever you like. PensionBee also believes in keeping investment costs low. It shares an ethos with Nutmeg in that it cares deeply about risk assessment, which is obviously going to be good news for anyone getting involved.
Above all, PensionBee offers a simple interface and a straightforward welcome to pension planning. This step-by-step approach, rather than a full dashboard, is going to be preferred by a lot of people who are just getting started.
What is Nutmeg?
Nutmeg is an online investment system which aims to break down pensions and money management for beginners and experts alike. Their website states that they aim to ‘democratise wealth management’. The service focuses on giving their users access to world-class financial services, with an emphasis on keeping costs low.
Nutmeg offers personal pension management as just one of its major packages. From the start, you can choose from four different investment options. These include general investments, stocks and shares ISAs, and lifetime ISAs (also in stocks and shares). The lifetime ISA option requires £100 minimum pay-in, while the pension service, and the others, require at least £500 from you to get started.
How Does Nutmeg Work?
Nutmeg’s team build diverse portfolios for their clients. Their approach is to understand your saving needs first, and to then build a pension and investment plan tailored to you. This is all backed by a risk system which, according to sources, is developed by Oxford Risk. What’s useful about this risk system when getting started is that Nutmeg asks you questions based on your experience. You don’t have to know much about pensions, markets or investments in general.
Nutmeg’s pension service allows you to transfer existing pension schemes into one manageable pot, while they regularly invest your money based on your initial profile. Simply provide the service with information on your pensions, fill out their risk questionnaire, and their team will do the rest to tailor a plan based on your needs and expectations. For a lot of people, this complete management will be very appealing.
Using the Service
Nutmeg allows you access to your money and projections 24 hours a day, seven days a week. You can contact a member of the team at any time for specialist advice and support. Before using the service, however, you will be asked to choose from a number of different plans. These will vary in terms of features and charges. We will cover fees a little further down.
The ‘fixed allocation’ plan, for example, will be preferred by people who would like their pension and investments to stand without intervention. This means a yearly review at most – and it is the cheapest option available. Further plans, such as ‘fully managed’, will give you access to expert support whenever you need it. You can also take on their ‘socially responsible’ service, where you can request that your money is only invested in companies who are socially responsible. It’s worth noting that, by default, pensions are treated as ‘managed’ portfolios. This is generally to your benefit, though fees will be higher than leave-alone services.
Nutmeg’s approach to pension consolidation and investment is to diversify as much as possible. Not everyone will find this approach appealing, though it seems to work for plenty of service adopters.
What Fees Do Nutmeg Charge?
Nutmeg’s pension fees are based on their managed rates. This means that they will charge you 0.75% per year on anything below £100,000. This gets slashed to 0.35% if you invest more than this in the service. What many people will find appealing about Nutmeg is that there are no setup, exit or transaction fees applied. You will be charged £20 per line if you choose to transfer stock to another person, however. Nutmeg will also refrain from charging you for trading, as they will manage this for you at a pension level.
Can You Transfer Any Pension into Nutmeg?
Nutmeg is open and clear on the pensions you can and can’t transfer across. For example, you will be free to transfer personal pensions, general contribution plans and SIPPs. However, Nutmeg won’t accept defined benefit plans, which is one key difference between this service and PensionBee’s. You won’t be able to transfer any pensions or pots across which are already in drawdown, which, again, scores against Nutmeg, and in favour of PensionBee.
However, Nutmeg is careful to advise that they won’t accept defined benefit or final salary plans at the time of writing. This means this term may change, though it’s safe not to bank on this for the time being.
Nutmeg Investment Style
Nutmeg has a very ‘hands-off’ style of investing in many ways, even when it comes to their managed options. Their aim is to encourage investors and pension holders to entrust their team to make expert decisions on their behalf. This is a very attractive proposal, and one it appears you can be confident in taking.
Nutmeg’s style of pension investment focuses more on diversifying investments than building savings, though this may be preferred by many savers. Its service also appears to be aimed at those who already have experience of investing at some level. While the platform and approach are simple, and the managed service takes away a lot of the stress of portfolio-keeping, there are still lots of facts, figures and widgets to keep track of.
Nutmeg regularly invests money for you based on your initial profile with the service. As opposed to offering set plans at the point of sign-up, you instead agree to money being diversified and recommended for you as you go along. This is going to appeal to people who prefer their pension investments to be a bit looser. It certainly seems that there is plenty of freedom.
In any case, let’s get back to the comparison, and first of all take a look at PensionBee’s overall performance.
PensionBee – Pros and Cons
- The PensionBee interface is user-friendly, and is perfect for people who are just getting started with savings, pensions and investments.
- Fees start from 0.5% annually, and halve after £100,000. Fees are deducted straight from your pension pot.
- There is no sign-up fee, and no exit fee after a year of service. There is also no minimum pay-in.
- You can transfer pensions into the service even when they are in drawdown. This means you may already be managing your pension before you move it across.
- PensionBee will also consider defined benefit pensions, but encourage you to get financial advice before you make the switch.
- Set plans make it easy for novice savers and investors to choose what they want to do. There is also a ‘tailored’ option with more freedom.
- You can use and manage the service any time of day, throughout the year.
- PensionBee will round up information on pensions for you with little information given. This will be appealing to anyone keen to get started as soon as possible.
- Upper fees at PensionBee reach 0.95% per year, higher than what some of the competition offers.
- If you transfer your whole pension or withdraw it in full within the first 12 months a fee of £480 will be charged.
- There are restrictions on certain government pensions, though this is a legal matter, and isn’t PensionBee’s fault!
- Some savers and investors may find the plans offered to be a little restrictive. The service does offer a tailored plan, however, if you prefer.
Nutmeg – Pros and Cons
- Nutmeg offers a flat fee of 0.75% on anything less than £100,000. More than this, and the rate drops to 0.35%. This is a very competitive rate, though PensionBee’s lowest rate is technically 0.25% after the £100,000 threshold is reached.
- Nutmeg offers a completely tailored approach to pensions and saving. Answer a few questions when you sign up and you will have a plan tailored to your needs and understanding.
- There are no exit fees unless you transfer stock to another person.
- Nutmeg offers several investment services, such as ISAs. They can either be left alone, or managed, as you require.
- Nutmeg gives you complete access to your portfolio at all times, as well as advice and guidance from staff when you need it.
- The risk system is designed by industry leaders, which should give investors extra confidence to get started.
- Nutmeg will diversify your investments in pursuit of low costs and enhanced growth.
- You will need to invest at least £500 to get started.
- Nutmeg does not currently accept defined benefit pensions.
- You won’t be able to move your pension across if it is already in drawdown.
- The yearly fee doesn’t vary as you are on one fixed managed plan.
- There are no additional plans to choose from unless you wish to start an ISA or general portfolio.
PensionBee vs Nutmeg: Conclusion
Both PensionBee and Nutmeg have plenty of benefits that are plain to see. They believe in diversifying investments and keeping costs low. Both, too, allow you to easily move your pensions across within around three months of signing up.
However, where they differ is in approach. Nutmeg appears to be aimed more at people with a little investment experience. PensionBee, however, is straightforward enough for complete beginners to get into. PensionBee’s early termination fee will be unappealing to some savers. However, so will Nutmeg’s lack of defined supporting plans.
PensionBee and Nutmeg are both reasonably priced, though only one rate applies to Nutmeg. PensionBee has smaller and larger rates based on packages. However, some will argue that these fees are worthy of the support.
Both Nutmeg and PensionBee are fantastic resources for pension consolidation and management. However, look to Nutmeg if you have more experience, and PensionBee if you’re just getting started with saving or purely looking to consolidate multiple pension pots.