Empowering the Freelance Economy

New self-employed pension app Penfold sets your pension plan up in five minutes

The team behind the Penfold self-employed pension app
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A new self-employed pension app called Penfold could have you saving for your pension and reducing your tax bill in a matter of minutes.

Penfold was founded by CEO Pete Hykin, who was self-employed for two years without a pension. Hykin in a Tech Crunch interview reiterated how he understands that the time to set up a typical pension is what is having freelancers and others unnecessarily leave free money on the table.

Penfold, a pension app that has just raised $8.5m, has built a self-employed pension plan that it claims customers can set up in under 5 minutes on their laptop or phone.

“Just choose how much to save, select a pension option, enter your details and you’re good to go,” says the company’s website.

Penfold, founded by former freelancers, developed the app because they understand the flexibility that self-employed people need when it comes to monthly finances and being short on time.

If you are a freelancer or company director it might be that you have put off saving into a pension because you believed you couldn’t afford it. Or procrastinated because the process of filling out forms and speaking to a pension advisor was considered too time-consuming. But if you knew you could reduce your tax bill considerably wouldn’t you jump at the chance?

How much could I get in tax bonuses or reductions if I set up a pension?

Sole-traders and freelancers get a 25% tax bonus from the government on contributions. That’s guaranteed cashback on what you save and Penfold will organise it for you, adding it directly to your pension.

Or, if you’re a limited company director, your pension contributions can reduce your corporation tax bill. However, tax treatment does depend on your individual circumstances and may be subject to change in the future, Penfold warns.

For example, pension contributions from your limited company are classed as a business expense, so you won’t pay any tax on these contributions. That means £1000 into your pension will reduce your tax bill by £190.

When it comes to a Company Director pension and paying through business contributions, when you get to the final page of the Penfold set-up process, swipe the ‘business’ toggle. The page will then prompt you to enter your limited company bank details and set up a Direct Debit with your business. You can then adjust, pause and top up your pension through your limited company bank account via Direct Debit and bank transfer.

How can you set up a pension in 5 minutes?

Once you’ve entered your details, you then select a pension plan that suits your age and investment preferences. It’s free to change your plan at any time. Next, enter some payment details. If you’re unsure of how much to save, their calculator can do the maths for you.

25% tax relief bonus

The government adds a 25% tax bonus to personal contributions into a pension. Penfold will automatically claim this for you.

Make tax-free contributions

Pension contributions are a business expense, so you won’t pay tax on the contributions.

Save up to 19% in tax

Director pension contributions are deductible from your corporation tax bill. £1000 into your pension will reduce your tax bill by £190.

Can I trust Penfold to manage my money?

Now, you may be thinking, who is Penfold and do I really want them managing my pension? The thing is they don’t manage your money directly. BlackRock, the world’s largest investment manager, does. When you add money into your Penfold pension it is invested in a special plan provided by BlackRock who would continue to invest your pension even if Penfold ceased to exist. 

Is Penfold’s pension plan protected by the FSCS?

Yes. Your pension is protected by the Financial Services Compensation Scheme (FSCS) should the investment manager fail, where the government protects up to £85,000 of your money (just like every other bank). For this reason, some people have more than one pension plan as most pensions are above the £85,000 protection level.

Penfold is regulated by the Financial Conduct Authority (FCA) which means that everything they do is subject to a wide range of controls and procedures that are approved by the UK’s financial regulator to keep your pension secure.

What are Penfold’s pension plan choices?

There are three pension plans. Standard, Sustainable and Shariah. The Standard and Sustainable are run by BlackRock and the Shariah-compliant one is managed by HSBC.

The Black Rock MyMap portfolios are made up of iShares ETFs and index funds to provide access to a wide investment universe of stocks, bonds, alternatives and cash. There are different levels of risk you can choose from, too.

How much are Penfold’s fees?

Penfold says that they will only charge you one annual fee for managing your pension that covers absolutely everything within Penfold’s pension service. You’ll pay an annual fee between 0.75% and 0.88%, depending on the plan you choose. They will automatically deduct a portion of your annual fee from your pension in 12 monthly instalments.

If your pension pot size is larger than £100,000 the fee is reduced on the portion of your savings over this amount.

For more details on their charges, click here.

See how they compare to other pension plan providers on the market here.

Trustpilot Reviews of Penfold

As always, there is a mixed bag of good and bad reviews as with any pension provider, so we thought we’d link to the Trustpilot reviews of Penfold to see what people have had to say: Penfold Reviews | Read Customer Service Reviews of www.getpenfold.com (trustpilot.com)

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