Penfold: A stellar app but portfolio performance is yet to shine

Penfold is ideally suited to small business owners who want to set up a good, reliable company pension for employees, with as little hassle as possible. This is a tech solution that is designed to keep auto-enrolment simple for employers.

Penfold also provides a self-invested personal pension (SIPP) for individuals wanting to set up their own pension or consolidate old pensions into one new self-managed account. These kinds of pensions are ideal for those who are self-employed or who want to transfer old pension pots into one consolidated account which can be managed personally.

One really nice feature of the Penfold SIPP is that it’s flexible – you can pause it, raise and lower deposit amounts which means you can keep it totally within your control. Penfold, therefore, might suit those who are also trying to save for a house, or who occasionally need to redirect their money to other areas of their life.

That said, SIPP savers wanting an active involvement in their investments will not find what they want at Penfold. There are just five plans to choose from and no chance to pick your own stocks or funds within those plans. So, it’s really only suited to people who want to keep things very simple indeed and tick ‘set up a pension’ off their to-do list.

As things stand, Penfold definitely seems more focused on the workplace pension side of the business, If you’re self-employed or an individual wanting more control over your retirement fund, there may be other providers who cater exclusively to your needs, and who offer more competitive fees, although it is a great app and the flexibility is useful.

Penfold provides two different services, intended for two different groups of people:

• A Self-Invested Personal Pension (SIPP) for individuals
• A workplace pension scheme for employers

Within both products, individual savers can choose from the following five funds:

Standard Lifetime plan

Managed by BlackRock. The Standard Lifetime plan is Penfold’s default fund, so if you can’t make your mind up, this is where your money will go, and all employees in the workplace pension start off here. The fund is designed to automatically adjust your asset allocation (what you are invested in) as you edge towards retirement age and need something less risky.

This plan has been designed to meet the needs of the majority of savers who do not receive financial advice and who don’t want to make their own investment or fund risk decisions. It's intended to be a low-cost and good value outcome.

Standard Plan

Managed by BlackRock. This plan is suitable for those who want to switch up the level of risk their investment is exposed to over time (which is wise as, generally, the closer you get to retirement, the safer you want your money to be). Investing in this fund, you can choose from four risk levels from low to high. Penfold makes it easy to adjust your risk level in a couple of taps, online or in your app.

Sustainable

Managed by BlackRock. The Sustainable plan is Penfold’s ethical, green pension option. With this option, you get 3 risk levels to choose from: Level 5 – Highest growth potential and risk; Level 3 – Low to medium growth potential and risk; Level 1 – Lowest growth potential and risk.

Sustainable Lifetime

Similar to Standard Lifetime, with more consideration given to ethical (ESG) investing.

Sharia

Managed by HSBC. Approved by an independent Sharia committee, this plan invests 100% in shares that are fully compliant with Sharia law.

Penfold SIPP

Penfold started out as a pension for the self-employed in 2019 and expanded to offering pensions to all individuals in 2021. The SIPP can be used to consolidate other pensions (including workplace pensions) or to start an entirely new pension saving pot.

There are four things I really like about this SIPP:

• You can pause it, raise and lower the deposit amounts and keep it within your control, which is really useful when you may also be trying to save for a house, for example. One negative thing about that, however, is that it can be all too easy to find something better to spend that money on every month, so you need to be self-disciplined with a flexible SIPP.
• Tracking down old pensions is made easy and free of charge. If you already have details of an old pension, you can start a Penfold pension with a transfer. Alternatively, you can use the ‘Find My Pension’ tool to track down the details of existing workplace pension pots. Simply enter the name of your old employer and Penfold takes care of the rest.
• The app is a thing of beauty: well-designed, clear, intuitive. It also provides a calculator to forecast your pension income which really helps to clarify how much you need to save to achieve your retirement dream. You can change the assumptions, add other pensions in, and model different contributions to work out the best strategy.
• Finally, although Penfold is a relative newcomer, their funds are managed by two of the best-known fund managers on the planet – BlackRock and HSBC – giving them heavyweight status.

So, what about the negatives?

With the introduction of their workplace pension in Autumn 2021, focus shifted away from the SIPP and there has been growing feedback about a lack of love on the SIPP customer service side.

There are five funds to choose from, so, not a lot of choice, but that may suit you if you find the sea of options offered by the big investment houses overwhelming.

Penfold Workplace Pension

Also known as a Group Personal Pension, this product is designed for employers setting up a workplace pension plan for employees.

The same five funds (see above) are available for employees. Initially, everyone is entered into the Standard Lifetime plan, but, once the pension is operational, employees can go into their portal and select a different plan, if they choose, tailored to their risk level.

As someone who has been in countless workplace pensions where I admit I had no idea what funds or assets my retirement savings were being invested in, I love how easily I can become involved in this workplace pension and the decisions that will impact what kind of retirement I can enjoy.

Important: With investments, your capital is at risk. Pensions can go down in value as well as up, so you could get back less than you invest.

One of the benefits of buying shares in a company is that they often come with voting rights. However, due to the nature of pension funds, investors usually don’t have the same ability to have their say, despite the fact they technically own a part of the company.

Penfold is unusual, though, in that they enable investors to have a voice through a partnership with a voting infrastructure fintech called Tumelo.

Through your ‘Have Your Say’ dashboard within your account, Penfold savers can cast a vote, although those votes are intended just to give an opinion and are not binding. Votes are collected together and the majority decision is then sent to the fund manager (Blackrock or HSBC). The fund manager will then share this result at the AGM, although they do not necessarily need to adhere to the opinion of savers as they have final discretion over how they vote. You can see how you voted, how the majority of Penfold savers voted, and the overall result at any time by logging in to your Tumelo account.

For contrast, savers with PensionBee are not entitled to any voting rights attached to their underlying investments, so if having your say is something that matters to you, Penfold could be a good match.

Mobile platform

Savers are directed to the Penfold mobile app.

Penfold describes their personal pension as a “tech-first pension for savers.” So, if you’re wanting to use Penfold for a personal pension, you’ve got to be happy with the usability of the Penfold app. I found it to be very intuitive with a nice user interface and a journey that is well-thought-through. The design is really welcoming and says ‘we’re not like all the others’. But, as a fintech challenger brand, not being like the others is what they’re aiming for!

I love the app’s features which include a free pension forecast tool which allows you to model different contribution amounts, and change retirement dates and other factors, to clearly see how much you’re on track to save into your retirement pot, and how much income that will give you as a retiree.

Web platform

Employers are directed to the Penfold web-based platform.

It’s built for payroll bulk processing and, again, you can tell plenty of thought has gone into the user experience. The easy-to-use technology completely eliminates the hassle of downloading, reformatting and uploading: instead, you can simply drag and drop files into the platform and Penfold’s smart tech will do the processing for you. You can even bulk upload files in one go and the software will automatically identify and process them by employee details.

Within the platform, there are detailed breakdowns of contribution statuses, histories, opt-out summaries, and employee contribution data – making auditing easy as you know all your key documents are stored in one place. And you can set reminders for payment and re-enrolment dates, which all helps with compliance.

Demo account

You can request a demo of the Penfold pension, but there is no demo account. You don’t need one, however, as the account itself takes no time at all to get used to.

SIPP

Penfold charges an annual fee as a percentage of your total pension pot value, which is automatically deducted from your pension pot: 0.75% (or 0.88% for the Sharia plan)

If your pension pot size is larger than £100,000, the fee is reduced to: 0.4% (0.53% for the Sharia plan)

The verdict?

For a SIPP, this is relatively pricey, particularly if you have less than £100k to invest. For comparison, Fidelity’s SIPP costs 0.35% in annual fees plus fund charges which start from 0.05%. Vanguard’s ultra-low priced SIPP starts from just 0.15% per annum, capped at £325 with fund charges at an additional 0.06% to 0.78%.

You do get a lot of convenience with Penfold as everything is made so easy, but you need to ask yourself whether you’re prepared to take money away from your pension pot to pay for that.

Workplace pension scheme

Penfold’s workplace pension scheme is free for employers to set up.

Charges for savers are the same as the SIPP, namely, one annual fee as a percentage of your total pension pot value: 0.75% (or 0.88% for the Sharia plan)

If your pension pot size is larger than £100,000, the fee is reduced to: 0.4% (0.53% for the Sharia plan)

The verdict?

On set up fees, Penfold compares very favourably with other workplace pension providers with no set up fees at all. NEST is similarly free to set up but, in contrast, The People’s Pension charges a £500 set up fee, Smart Pension charges £15 per month to run your pension (£30 per month if you pay by BACs), and Aviva charges £30-£50 monthly depending on scheme size and proposition. Now Pensions charges £36 per month. Penfold and NEST are clear winners here.

For savers/employees, however, Penfold’s fees are far from the cheapest if your pot amounts to less than £100k at 0.75% (0.88% for the Sharia plan).

The provider average seems to be 0.3%, with Aviva, Royal London, Smart Pension and Now Pensions all setting their annual management charge at this 0.3% mark. Fidelity is slightly higher at 0.35% and The People’s Pension comes in at 0.5%, although there’s a reduction at £50k.

Penfold’s fees become slightly more competitive if you tip over that £100k threshold at 0.4% (0.53% for Sharia). And if you take additional charges that some other providers apply, such as the £1.75% monthly admin charge from Smart Pension, the £1.25 monthly admin charge from Now Pensions, and NEST’s 1.8% charge for each new contribution, things start to even out, although by how much depends on your pot size of course.

Penfold could reasonably claim to earn those additional percentage points with its well-perfoming funds and high-tech, ease-of-use app. Penfold also has one of the best Trustpilot scores, suggesting high levels of satisfaction with its platform.

For reference on the fund performance, between March 2020 and March 2023, Penfold customers averaged 4.29% returns on their funds (before fees). This compares with 3.40% returns on Aviva’s My Future Focus funds, 3.81% on Royal London funds, 2.80% from The People’s Pension and 1.40% on Now Pensions’ funds. Outperforming them all, however, was NEST on 5.22% over the same period.

Skip to Investing Insiders’ John Choong's analysis of Penfold's ready-made portfolio performance.

Withdrawal fees

There are no fees for transferring in or out of your Penfold account.

Deposit fees

There are no charges for depositing money into your Penfold account.

Minimum deposit

Penfold takes the view that any investment into a pension, however small, is worth doing, so contributions can be whatever you like, starting from £10. This is not mandated, however. If you need to stop making deposits for any length of time, Penfold is happy for you to stop making contributions.

Interest paid on cash

How Penfold manages interest on cash held in accounts is a little bit confusing. They are clear that no interest is paid on the cash temporarily held, on your behalf, through your Penfold Pension. But interest is paid by Penfold’s custodian, Seccl. So you’d think that some interest might be coming your way if you hold uninvested cash in your account. However, it seems that Seccl is currently unable to allocate this interest to all customer fund accounts, so the interest is being distributed to charity instead. Penfold does say they review their position on interest from time to time so things may change but, for now, expect not to receive any.

Please note: all published fees are correct at time of publishing. However, we suggest checking Penfold’s website for the most up-to-date figures.

Penfold is designed to make saving for retirement simple. It’s not set up for those who want to choose individual stocks for their portfolio and, as such, there’s not much need to provide advanced research tools for Penfold customers.

If you’re after the kind of SIPP that gives you complete control over your investment, then try top-recommended providers: AJ Bell or InvestEngine.

Personally, I think Penfold gets the balance just right: providing clear, detailed information on the differences between its five funds and the various risk levels within funds, but without drowning users in data. For those who want a bit more depth of information, Penfold provides links to the BlackRock and HSBC websites where users can get extensive data on the make-up of funds in each plan invests, and the funds’ historical performance.

Penfold’s approach to investment might be of interest to you if you’re someone who cares about where your money is invested and is ultimately prepared to shop around on that basis. In summary, Penfold’s approach is:

• Passive: Using funds that provide exposure across the whole market as opposed to actively managed funds that require humans to pick individual stocks.
• Low-cost: Penfold chooses to invest in Exchange-Traded Funds (ETFs) to keep costs as low as possible.
• Diversified: An approach that values holding a wide range of investment types so you’re not holding all your eggs in one basket.
• Actively managed for risk: Adjustments and interventions are made regularly to manage and mitigate risk effectively.

This approach isn’t radically different from what you’ll find most wealth managers recommend for a retirement fund. It’s an evidence-based approach that ensures you don’t put all your eggs in one basket, and helps to ensure losses in one area are balanced with gains elsewhere.

When it comes to something as important as saving for your future, you want to know your money is being properly looked after. Penfold offers all the standard reassurances you should expect from a reputable financial services platform:

• Penfold is authorised and overseen by the UK Financial Conduct Authority (FCA).
• Penfold is part of the Financial Services Compensation Scheme (FSCS). In the unlikely event that something were to happen to Penfold or their partners (BlackRock, HSBC, and Lloyds Bank), the value of your pension is protected up to a maximum of £85,000 per eligible person and claim.
• Penfold uses encryption technology to help keep your data private.
• All of your pension savings are kept separate from Penfold’s own money. This means if anything were to happen to Penfold, your money can’t be touched. In the case of Penfold ceasing to trade, your pot would be transferred to another pension provider.
• Anything you pay into your pension first goes into a secure account held by a highly regulated custodian bank. It’s usually held there for 1 business day before being used to buy into your chosen pension plan. It’s never held by Penfold directly.

Remember, though, that investing always involves some level of risk. The value of your pension can go up as well as down, and you could get back less than you put in

As you’d expect, Penfold’s educational materials focus on pensions, although there are also some articles and insights on related topics that may interest users such as self-assessment.

It’s useful content – there are guides to pensions which start from the ground up and offer clear explanations and include videos. There are also guides to using the platform.

Penfold aims to cut through the confusion on pensions – and their small library of resources does that pretty well.

You can contact Penfold via:

• Webchat in the app
• Email: hello@getpenfold.com
• Telephone: 020 8003 5908

If you’re a customer, you can also use the AI chatbot which I found had the answers to the questions I had, meaning I didn’t need to use the option to connect to a human.

Penfold offers an additional “concierge” service for employers. This 1:1 support can help with onboarding staff and scheme implementation. This is a real plus point for Penfold and something Penfold’s business customers feedback positively on. Note, however, these support agents cannot give financial advice.

Penfold has a “Great” score on Trustpilot – 4.2 at the time of writing – based on almost 900 reviews. Recent reviews cite delays getting through. However, my experience of phoning customer services was very positive. I was given the option to hang up instead of waiting and receive a call back on the number I’d called on. I was called back just 15 minutes later and the agent was extremely helpful, answering each of my enquiries.

Account opening

It could not be more simple with Penfold. The whole journey took me just five minutes to complete, and required just my personal details; no bank account details or documentation.

Watch this video to view the Penfold account opening processes:

*Insert Video

Closing your account

Penfold does not charge for closing your account. However, some recent customer reviews on Trustpilot are very negative about how long it takes for accounts to be closed and funds transferred.

Transferring accounts

Penfold does not charge fees for transferring over to another provider. Penfold say that, on average, it takes around 4-8 weeks for a pension to be transferred, assuming that there are no complications involved (ie. policy number not matching). Some users on Trustpilot, however, report long delays getting transfers actioned, although this could be caused by hold-ups on the side of the old pension provider.

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