Fast-growing fintech Plum has announced a major expansion into retirement savings with the launch of its first-ever pension product. The subscription-free Plum SIPP, or self-invested personal pension, is designed to get a new generation engaged with their lifetime finances.
The SIPP can be found alongside customers’ day-to-day spending, saving and other investments in the Plum app, so they can have complete visibility over their finances in one smart system. Onboarding is designed to be as easy as possible with six steps, so customers can be using the pension platform in minutes, consolidate their old pensions in one place and start making automatic payments straightaway.
Customers benefit from Plum’s smart saving algorithm, which tucks away as much as they can afford and splits it between interest-bearing savings, investments and pensions according to the customer’s chosen saving strategy. Customers can also choose from funds that are risk-managed according to their current age and the remaining years to retirement. Plum offers a range of well-diversified retirement funds, including a green fund that gives greater weight to companies that meet positive carbon and environmental criteria.
Self-invested personal pensions offer the extra benefit of tax relief, as once money is in the SIPP, it can grow free from UK capital gains tax and UK income tax. All contributions to the SIPP are treated as having been paid at a basic rate tax (20% for 2020/2021 tax year). For example, if a customer pays a net contribution of £80 then Plum is able to reclaim £20 from HMRC and credit this amount to their SIPP once it has been received. This ensures that money is being saved in the most efficient way possible until customers are eligible to withdraw.
The company’s move into retirement savings comes at an important time. According to the Bank of England, around £100billion extra was saved during 2020, and many wish to use this money to build their long-term financial resilience. Furthermore, with many people changing jobs as the furlough scheme ends, ensuring pension pots do not get lost will be more important than ever. Based on research by the Pension Policy Institute, nearly two-thirds of UK adults have multiple pension pots from different jobs. The Plum SIPP gives the option to consolidate these pensions simply in one place for full visibility and control.
This announcement comes as Plum begins a major expansion of its wealth-building offering in the second half of 2021. Alongside the SIPP, the company is aiming to have stock trading and crypto options available later in the year. Plum now has more than 1.5m customers across Europe and is forecasted to have more than $1.5bn saved globally by the end of 2021.
Victor Trokoudes, co-founder and CEO of Plum, comments: “We’ve seen a lot of changes in the UK over the last decade. On the good side, auto-enrolment means millions of us now have made a start on our pensions. On the bad side, these pensions are inaccessible to the point that people forget they even have them. Creating a better future for yourself should not be this difficult! By bringing all your pensions into one app, you can manage your SIPP easily alongside your other savings and investments, and choose where your money goes to secure your future. Our goal is that checking your pension will become as easy and natural as checking your bank balance.”
The Plum SIPP was also launched to meet the demand of an increasing number of people (more than 5m in the UK) who work very flexibly or are self-employed. Self-employed people are not able to take advantage of an automatic workplace pension and could therefore benefit from having a SIPP as their main pension for retirement. According to research from Nest, only 24% of self-employed people are currently saving into a pension. With entrepreneurship on the rise in the wake of the pandemic, there will be a growing need for affordable, accessible lifetime saving products.
Trokoudes adds: “The way we work and live our lives day-to-day is changing fast. People want control and flexibility over their finances, so they can be resilient whichever way their life and career pans out. Opening a SIPP is a great way to make sure you look after your future as well as your present. With Plum, you can put your pension on autopilot with a system that can adapt to whatever lies ahead.”