Penfold: app-based personal and workplace pensions

Penfold is a digital pension provider. You open a personal pension or join through your employer, and you run the whole thing from an app or a browser rather than through paperwork and phone calls. You check the balance, change how the money is invested, adjust contributions and, later, set up withdrawals there. It is a defined contribution arrangement, so the pot you end up with depends on what goes in and how the investments perform, not on a promise of a set income.

It comes in two shapes. The first is a personal pension you take out yourself, which is the same category of product as any other personal pension in the UK: personal pension schemes, including stakeholder pensions, are provided by insurance companies, banks and building societies¹. The second is a workplace pension, where an employer uses Penfold as the scheme it enrols staff into.

This page covers what Penfold offers, how its charges are structured, how you get money out, how to move an old pension across, how to contact it and complain, and what protects your money. Penfold's own site carries today's charges and product terms, and that is where the current figures live.

What Penfold offers: a digital pension you manage in an app

Penfold's product is a pension, not a bank account or an investment platform in the general sense. The distinction between the two shapes matters because the rules around them are different. All employers must offer a workplace pension scheme by law, and all employers must organise pensions for employees to help them save for retirement⁸. A scheme used for automatic enrolment has to meet certain rules, for example it must not require staff to do anything to join the scheme or to choose their own investments¹⁰. That is why workplace pensions of this kind tend to arrive with a default investment already selected.

A personal pension you open yourself has no employer involvement. You choose it, you pay in, and you can usually change the amount or stop when you want. Some employers offer personal pensions as workplace pensions, so the same product can sit on either side of that line depending on how you came to it⁸.

For the wider picture of how these products compare and what the alternatives are, the pensions guide covers the ground, and the pension and investment providers list sets out who operates in this market.

How Penfold's charges work: one annual fee

Pension charges are usually expressed as a percentage taken from your fund rather than a flat sum, and that is the model official guidance describes: the pension provider may charge you for starting and running your pension, and usually they take a percentage from your pension fund⁴. A single annual percentage covering the running of the pension is the common structure for app-based providers, and Penfold's own site states its current figure.

Two things are worth separating when you look at any pension's costs. The first is the platform or provider charge, which is what you pay the firm for holding and administering the pension. The second is the cost of the investments inside it, which is charged by whoever runs the funds and is separate from the provider's own fee. A headline annual percentage often refers only to the first.

There is also a charge that appears later rather than now. Once you are taking an income from a flexi-access drawdown fund, you pay a fee to your pension provider for each withdrawal you make⁵. That is a per-withdrawal cost, not an annual one, so it behaves differently depending on how often you take money out.

Penfold does not publish its rates on this page, and this site does not carry provider rates. Its own website sets out the current charges for each product, and that is the figure to check before deciding anything.

Taking money out: drawdown, annuity or a lump sum

When you reach the point of using the pension, the options are the same as for any defined contribution pot. You can take a scheme pension, which is a secured pension for life paid out of the scheme assets or purchased from an insurance company; buy an annuity; or draw an income directly from your pension fund as a drawdown pension¹¹.

The tax treatment is what most people want to know first. In most schemes you can take 25 per cent of your pension pot as a tax-free lump sum⁴. If you take a lump sum, 25 per cent is usually paid tax-free as long as the total amount of tax-free cash you take stays within the limit, and the other 75 per cent counts as earnings for Income Tax¹². That last point catches people out: a large lump sum can push you into a higher tax band for that year, because it is treated as income rather than as capital.

There is a simpler route for small pots. You can take a whole pension pot worth up to £10,000 as a lump sum⁵. That is a different rule from the 25 per cent tax-free cash, and it exists so that small stranded pots can be cleared without setting up an income.

Where a pot is £10,000 or less and there are no safeguarded benefits, the rules on what a firm must ask you are lighter: it is not required to ask questions to identify whether any risk factors are present, and it must prepare appropriate retirement risk warnings based on the risk factors relevant to each pension decumulation product it offers¹³. In other words, the warnings you get are scaled to the product, not to a full advice conversation.

Changing withdrawals and spending your savings

Once a pension is in drawdown, the money that has not been withdrawn stays invested. Your pension fund will continue to be invested, and you will receive yearly statements and forecasts on how it is performing¹⁴. That is the main difference between drawdown and buying an annuity: with drawdown the fund keeps working and keeps carrying investment risk, while an annuity converts the pot into a guaranteed income and removes that risk.

The practical consequence is that withdrawals are adjustable. You can take more in one year and less in another, which suits people who want to manage their tax position year by year, and it also means the pot can run down faster than expected if markets fall while you are taking money out.

Withdrawals are not instant in the way a bank transfer is. A drawdown withdrawal is a transaction the provider processes, and it attracts a fee per withdrawal⁵. Taking money monthly rather than in one annual lump therefore costs more in charges, which is a trade-off worth understanding before setting a pattern.

If you hold savings alongside the pension, the rules there are different again. Money in a Help to Save account, for example, can be withdrawn at any time and paid into your bank account¹⁵. Pension money does not work like that: it is designed to be locked away until you are old enough to access it, and the tax treatment on the way out reflects that.

Moving other pensions to Penfold, including Nest

You can transfer your UK pension pot to another registered UK pension scheme¹⁶. The process is standard across providers, and it runs in a set order: check your current scheme allows transfers out; make sure you will not lose any benefits; decide which scheme to transfer into; check whether you need to pay for financial advice; ask your current provider for a transfer value; and ask the new scheme to start the transfer¹⁷.

Two of those steps are where people come unstuck. The first is losing benefits. Some older schemes carry guarantees, a protected retirement age or a defined benefit promise, and moving that money into a defined contribution arrangement gives those up permanently. Penfold states that it will not accept transfers of defined benefits or safeguarded rights of any size, and that only cash transfers are accepted unless otherwise agreed². The second is advice. If you are transferring from a defined benefit scheme, the FCA's guidance on defined contribution transfers sets out when advice is required, and it is a legal requirement in some cases rather than a suggestion¹⁷.

Stakeholder pensions have a specific protection here: you can switch to a different pension provider without penalty charges¹⁸. That does not apply to every pension, so it is worth checking what your current scheme's terms say before assuming a move is free.

Consolidating several small pots into one is the usual reason people transfer, and it does make a pension easier to track. It is not automatically better: you need to compare what you are giving up against what you gain, and the checks the receiving scheme carries out exist for that reason. Trustees must carry out certain checks and processes when dealing with pension transfer requests, and they must send the pension scams leaflet to any member who requests a transfer, which can be a weblink rather than a hard copy¹⁹.

Penfold for employers: workplace pensions and guidance support

For an employer, Penfold is one of the schemes available to meet a legal duty rather than an optional extra. All employers must offer a workplace pension scheme by law⁹. When your employer automatically enrols you into their workplace pension scheme, they must write to you with the date they have added you to the scheme, the type of pension scheme and who runs it, how much they will contribute and how much you will have to pay in, and how you can leave the scheme⁹.

That letter is the document to keep, because it tells you the contribution rates on both sides. It also tells you how to leave, which is a right rather than a trap: you can opt out, though doing so means giving up the employer contribution that comes with being in the scheme.

Employers choosing a scheme have their own checklist. A pension scheme used for automatic enrolment must meet certain rules, for example it must not require staff to do anything to join the scheme or to choose their own investments¹⁰. That is why workplace schemes of this kind come with a default fund and an automatic joining process.

Guidance is a separate thing from advice, and the distinction matters. Guidance is a broader term including general information and signposting about pensions which does not include a recommendation²¹. Any organisation can offer guidance, and free pension guidance is provided by MoneyHelper²¹. For advice about increasing your workplace or private pension, the official position is to speak to a financial adviser⁸.

MoneyHelper's guides are available in English and Welsh, and in print, braille or audio format, for free²². If you are an employer or an employee who wants to understand the scheme without paying for advice, that is the starting point.

Managing your pension online and through in-app chat

Penfold's service model is app-first. Routine tasks, checking the balance, changing contributions, adjusting investments, are designed to happen in the app or on the website rather than through posted forms. That is the main practical difference between a provider like this and an older personal pension administered by phone and post.

Some things still need a document, and one of them matters more than the rest. Your pension provider will ask you to complete an expression of wish form, which tells them who you would like to receive your pension, and you are expected to keep it updated²³. This is the form that directs a death benefit lump sum, and an out-of-date one can send money to someone you would no longer choose. The Pensions Ombudsman investigates and resolves complaints and disputes about occupational and personal pension schemes, and death benefit lump sum cases are part of that work²⁴.

If you are dealing with several pensions at once, including the State Pension, there are separate services for each. You can report some changes online using the manage your State Pension service²⁵. For finding a lost pension, the Pension Tracing Service exists to find details of a person's personal or workplace pension²⁶.

If you want to talk something through with a person rather than an app, MoneyHelper offers webchat, WhatsApp, or a phone call²⁷. That route is free and independent of any provider.

Complaints: how Penfold handles them and when the Financial Ombudsman can help

A complaint has to go to the firm first. The firm has at least eight weeks to try to resolve your complaint, and it should then send a final decision letter telling you how to contact the Financial Ombudsman Service⁶. That eight-week window is the standard across financial services, and it is the gate you have to pass through before an ombudsman can look at the case.

The Financial Ombudsman Service is the body for complaints about financial services, and it can consider complaints from microenterprises and SMEs as well as consumers²⁸. When it assesses a complaint it considers the relevant law and regulations, the regulator's rules, guidance and standards, and industry codes of practice at the time of the event³⁰. If it upholds a consumer's complaint, it tells the business what it needs to do to put things right and may ask it to compensate for distress or inconvenience³¹.

Pensions have a second route. The Pensions Ombudsman can look at complaints about the administration of personal and occupational pension schemes³². Its process has two speeds: it will normally validate your complaint within one month, and complaints with a clear outcome are likely to be resolved within 18 months, while complaints needing a formal investigation are likely to take more than 18 months⁷. The Pensions Ombudsman publishes member guidance covering how to complain about a pension problem, common pension complaint topics, who can complain, and what it can and cannot do³³.

If the problem is with the running of a workplace scheme rather than the provider's service, there is a separate reporting route. Concerns about your employer or workplace pension scheme can be reported in confidence if you think they are involved in wrongdoing in an area The Pensions Regulator regulates, which includes dishonesty or fraud in your workplace pension scheme, or significant concerns about how the scheme is being run³⁴.

How your pension is protected and regulated

The first layer of protection is authorisation. You can check whether a provider or adviser is authorised by the PRA or FCA on the FCA register³⁶. Penfold is authorised, with that status effective from 1 May 2019, and Penfold is its current trading name². Checking the register is the single most useful thing a consumer can do before paying money to any financial firm.

The second layer is the regulator. The Pensions Regulator regulates the way workplace pension schemes are run³⁷, and it describes itself as the regulator for workplace pensions, with its primary focus on ensuring savers' pension money is protected²⁰. It also has statutory objectives that include protecting members' benefits and promoting and improving understanding of the good administration of work-based pension schemes³⁸.

The third layer is compensation, and this is where pensions differ from savings. The Pension Protection Fund protects millions of people in the UK who are members of defined benefit pension schemes³⁹. It is a statutory fund to protect members of DB schemes if the scheme's sponsor becomes insolvent, and it was set up in 2005⁴⁰. A defined contribution pension of the kind Penfold provides is not a defined benefit scheme, so the Pension Protection Fund does not apply to it in the same way. The value of a defined contribution pot depends on contributions and investment performance, and there is no fund standing behind it to make up a shortfall.

That is the limit worth stating plainly. FSCS protection covers deposits and certain investments, and you can check what is protected on the FSCS site⁴². A pension pot is not a bank deposit, and the compensation arrangements that apply to a current account do not transfer across to it. If you want to understand where protection stops for different products, the consumer protection guide sets out the boundaries.

If something has gone wrong and you are not sure who to approach, the pensions guide covers the routes, and free help is available from MoneyHelper on webchat, WhatsApp, or by phone²⁷.