Robo Advisors 14 – PensionBee Interview

PensionBee

5 Responses

  1. Bryan Matthew says:

    Interesting Mike but isn’t one of Pension Bee’s strongest attractions (having all your pensions in one place) also a serious weakness? If for example they are correct that the average employee may over their life have 11 different jobs (and up to 11 different pensions), the chances of all of them becoming say insolvent must be very low but if you put them all with just one provider, then the risks are greatly increased.

    I also read something that they put out that in the case of insolvency, Pension Bee are only liable for claims up to 50k- did they indicate if there is any other protection in the case of them going out of business. I am not sure if the FSCS covers you in case of insolvency?

    • Mike Rawson Mike Rawson says:

      Hi Bryan,

      I think in part you are confusing DB and DC pensions. DB pensions are more likely to go bust, but have better protection (the Pension Protection Fund pays out 90% / 100% of your pension). You are correct that the chances of 11 DB pensions becoming insolvent are slim, but I wouldn’t want to manage 11 DB pensions in any case. I have two, and that’s plenty.

      PensionBee is more about consolidating your DC pensions. All DC pensions are basically a pot of money on a platform, with that money invested into a set of funds. Compensation is limited to £50K, but that’s not a PensionBee feature, it’s common to all platforms (and to ISAs as well as pensions).

      Since the money is in the underlying funds, your real counterparty is BlackRock, or State Street, not the platform. These fund managers are unlikely to go bust, and you would still have a claim on the assets of the fund.

      Consolidation is a personal issue, and I wouldn’t like to depend on just one pension. But between us, my partner and I currently have 15 pensions, so I think that some consolidation is in order.

      Mike

  2. Hi Brian and Mike,
    If something happens to our money managers, which is where your money is kept, your pension will be protected by the Financial Services Compensation Scheme up to 100%. We’ll also pursue any compensation on your behalf. Contrary to many SIPPS and ISA’s the pension products are setup differently, hence the 100% guarantee without upper limit.

    • Mike Rawson Mike Rawson says:

      Hi Jasper,

      That’s good to know, but it sound very unusual for a DC scheme.

      Can you tell us more about how you qualify for 100% compensation under FSCS?

      Thanks,

      Mike

  3. PensionBee plans are managed under a life insurance contract and not as an investment, hence the different level of cover. It was really important for us to set it up this way so customers would not be left out of pocket if something would happen to us or the money manager. Read more about the different level of cover here: https://www.fscs.org.uk/what-we-cover/products/pensions/compensation-limits-for-pensions-retirement-savings/

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Robo Advisors 14 – PensionBee Interview

by Mike Rawson time to read: 7 min
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