Moneybox - How does the Moneybox Pension work?
Everything you need to know about the Moneybox Pension.
How does the Moneybox Pension work?
Everything you need to know about the Moneybox Pension.
Pensions23rd July 2021
To celebrate Pension Awareness Week and kick-start your journey to a more comfortable future, we’re offering you a free £50 when you add your first £50 into a Moneybox Pension! You can do this by making a contribution, or by transferring an old pension worth at least £50 to Moneybox. Please note, this offer is available from 13th September to 13th October 2021. T&Cs apply.
The Moneybox Pension puts you in control of your financial future. You’ll be able to bring together your old pension pots, save towards your retirement and see exactly how much money you’ve got and where it’s invested – all within the Moneybox app.
Why does Moneybox offer a pension?
Millions of people have thousands of pounds sitting in old pension pots they barely know anything about. In fact, there are 1.6 million lost pension pots in the UK worth over £19bn – the equivalent of £13,000 per plan!
With the government’s auto-enrolment scheme into workplace pensions, every new job means you get another new pension. With the average person now having 11 jobs over the course of their career, these old pensions can become really difficult to keep track of and traditional providers don’t make it easy. They often barely engage with their customers and when they do, they send letters to addresses you haven’t lived at for years, written in financial jargon that hardly anyone understands. Even the basics like checking your account balance and seeing where your money’s invested can be really hard.
How can Moneybox help?
We’ve built a pension that lives on your phone and is designed for the way you live today.
You can easily bring together all your old, stranded pension pots into one place and check your account balance anytime, anywhere. 📲 You can also open a Moneybox Pension without transferring in an old pot and start contributing right away. You can add money to your pension in the same way as your other Moneybox accounts, plus you’ll automatically receive 25% tax relief from the government on all your contributions. Your pension will sit alongside your other savings and investments in the app, putting you in control of your financial future.
So far, we’ve helped thousands of customers find and combine millions of pounds from old pension pots, and we’re just getting started.
How to consolidate your old pension pots
To transfer an old pension we just need two pieces of information – the name of your old pension provider and your old pension policy number. We know it can be tricky to keep track of old pensions and who they are held with, so if you don’t know these details, never fear – we can help track them down.
With our Pension Provider Search Tool, all you need to do is share the name of your old employer and the years you worked there and you’ll get search results for your pension provider – instantly! We have one of the largest databases in the UK with over 20,000 providers. We also have a team of Pension Detectives on hand to help track down the pots our tool hasn’t come across before, and will be able to help with any questions you have. 🕵️
Once the above details are confirmed, we can start your transfer. For most providers this can be an end to end electronic process taking on average 2-3 weeks. If we do need a signature from you, our team will send a form out to you the next day. Unfortunately, some providers only operate via manual systems, meaning all correspondence must be completed via paper-based mail. This can slow things down but our team is committed to doing everything they can to ensure a speedy transfer process from the Moneybox side. You can also track the progress of your transfer in the app.
How can I contribute to my pension?
You’ll be able to contribute to your Moneybox Pension in the same way as other Moneybox accounts by setting up a weekly payment, making one-off deposits or topping up your pension with a payday boost! You can also contribute via round ups and invest the spare change from your everyday purchases directly into your pension.
What can I invest in?
The Moneybox Pension gives you the choice to invest into one of our four Starting Funds:
- Fidelity Index World Fund (this is the same equities fund available in the app for a Moneybox Stocks & Shares ISA, GIA, or Stocks & Shares Lifetime ISA) – This fund diversifies your investments across more than 1,600 companies and 23 countries.
- Old Mutual MSCI World ESG Index Fund – This fund also invests in a range of global companies but considers environmental, social and governance factors – such as how companies respond to climate change, treat their workers and manage their supply chains.
- BlackRock LifePath Funds – A ‘Lifestyle’ fund unique to pensions, which changes the balance of investments as you get closer to your retirement date. When you select this fund you’ll be asked to select the one with a target date that matches when you think you will retire. If you’re unsure of this, we recommend that you speak with an independent advisor.
- HSBC Islamic Global Equity fund – Follow the principles of Islamic finance with an investment process that has been approved by an independent Shariah committee. This fund excludes industries like alcohol, gambling, tobacco, military equipment or weapons and any products containing pork. You can invest in global companies across a range of sectors like Technology and Healthcare.
You will be able to change your investment fund at any time in the app.
Looking to invest across multiple funds to build your own portfolio? You can now customise your pension allocations and get access to even more new funds, such as Technology, Healthcare and Emerging Markets funds.
Choosing to build your own pension portfolio across multiple funds gives you the opportunity to invest in line with your values and objectives. It also means you’re in control of your allocations, so it’s important you understand how you should be selecting funds and managing investment risk.
What are the fees?
For the first £100,000 in your Moneybox Personal Pension, the account fee is 0.45% per year, billed monthly. On balances over £100,000 this comes down to just 0.15%. This fee is calculated daily and charged at the end of each month.
You’ll also be charged the fund provider fee ranging from 0.14%-0.58%.
- Fidelity Index World Fund: 0.14%
- Old Mutual MSCI World ESG Index Fund: 0.24%
- Blackrock LifePath Fund: 0.21%
- HSBC Islamic Global Equity fund: 0.58%
You should carefully compare the fees charged on any old pensions with other pensions available.
Dedicated Pension Transfers & Pension Detectives Team
Our dedicated pensions team is available 9am – 5.30pm Monday to Friday. We recommend getting in touch with our team via the in-app chat – they are super responsive! Alternatively, you can email firstname.lastname@example.org.
🎓 Made it through all 10 lessons? Congratulations! You’ve officially completed the Moneybox Pensions Academy. 🎉 We hope this series has armed you with the information you need to make confident financial decisions about your retirement and feel empowered to save and invest for your future.
Top Pension FAQs❓
Can I move any type of pension to Moneybox?
We’re able to accept transfers of old workplace pensions (ones you are no longer contributing to) and personal pensions from many different providers. If your old pension is a ‘defined benefit’ scheme or has any special benefits (for example a greater than 25% tax free drawdown amount), we wouldn’t be able to accept this as it would be in your best interest to continue benefiting from that scheme.
If your pension is from another country, it’s likely this also can’t be transferred. However, we can check for you to be sure. Send the team a message and they’ll do some investigating.
Can my employer pay into my Moneybox Pension?
Unfortunately not. We’re only able to transfer old pensions that are no longer being paid into by your employer.
How much money should I have in my pension?
Fidelity estimates that saving 7x (times) your annual income by age 68, together with the state pension, should maintain a similar standard of living in retirement as in working life. So, for someone on a £50,000 salary at retirement, that would mean a final pot of around £350,000 in today’s money.
How much should I expect to pay in fees?
Fees are important because they reduce the performance of your pension, and over the long term even small differences in fees can have a big impact on the amount of money you end up with. The funds used for auto-enrolment can charge a maximum of 0.75% annually.
You should carefully compare the fees charged on any old pensions with other pensions available – where cheaper options are available, you may want to consider switching.
How does drawdown work?
The Moneybox Pension is currently available as a service to consolidate your old pensions and save towards your retirement – we do not currently offer a drawdown service. At this time, if you become eligible to make drawdown payments on your pension whilst it is held with Moneybox, you will need to first transfer your pension to another provider. We’ll make sure this is as easy and smooth as possible! Drawdown is on our roadmap and we’ll be sure to keep you updated regarding when this might be available.
Should I consider a personal pension or a Lifetime ISA?
Pensions and Lifetime ISAs can both be used to save for retirement but have important differences, including when you pay income tax.
Your contributions into a pension benefit from a 25% top up from the government (known as basic rate tax relief), however if you are a higher or additional tax rate payer you may claim additional tax relief. Pensions benefit from a higher annual contribution allowance which means you can normally pay up to £32,000 each tax year into your pension. When you retire you have the option to take a tax free cash lump sum up to 25% of the value of your pension, however you pay tax on the remaining money you withdraw from it during retirement. You can access your pension from age 55, however this is increasing to age 57 from April 2028. A Lifetime ISA also benefits from a 25% government bonus on your savings, however you cannot claim additional relief from the government. The LISA annual allowance is also lower when compared to a pension. You can pay up to £4,000 into your LISA each tax year, however your withdrawals will be tax-free. You can access your LISA for retirement purposes from age 60.
For most people, it makes sense to pay into a pension rather than a Lifetime ISA, but this depends on tax rates and the age you want to access your investments. A Lifetime ISA could be relevant if you’re self-employed, earning less than £10,000 from a single employer, not working, or if you expect to pay a higher tax rate in retirement than you do in work – this will depend on your individual circumstances so you’ll need to assess the benefits of a pension or Lifetime ISA or seek independent financial advice.
More information on Lifetime ISAs.
When deciding whether to transfer your pension, it’s important to compare the charges and benefits between Moneybox and your old provider, and whether the risk and reward profile of the investments we offer matches your needs. As with all investing, the value of your pension can go up and down, and you may get back less than you invest. Payments you make into your pension won’t be accessible until the minimum pension age (currently 55 increasing to 57 in 2028). We do not currently offer drawdown products (for the Moneybox Pension). If you’re not sure whether the Moneybox Pension is right for you, a suitably qualified financial adviser can help you decide. Moneybox Personal Pension T&Cs Apply.