Legislation dating back almost two decades is contributing to a general inertia in the UK when it comes to pensions and is holding people back with their financial planning, according to online pension provider PensionBee’s CEO Romi Savova.
“As a society, we are painfully unaware of the huge benefit that our pensions will have for us later on,” Savova told City AM. “We want to stimulate consumers into being responsible for their retirements, but they’re completely blocked by regulation that makes it hard.”
The regulation to which Savova refers dates back to 1993 and allows pension providers six months to effect a pension switch – far more than the seven days it takes to switch a current account, a more complicated financial product. But there’s currently nothing UK workers can do to speed the process up.
“I think this is the single biggest barrier to people taking more control of their pension, as it creates the perception that it’s difficult to do anything about it – that it’s just something that happens to you,” Savova said.
Five months after PensionBee raised £55m as it debuted on the London Stock Exchange, today it reported interim revenues more than doubled in the first half of the year to £5.4m, up from £2.6m in the same period last year.
Assets under management swelled by 117 per cent year-on-year to £2bn, fuelled by a retention rate of 95 per cent – which according to company modelling means the average customer stays with PensionBee for 20 year
Pre-tax losses jumped to £12.8m from £5.2m in the same period last year – with the company’s investment in marketing efforts largely responsible, as it seeks to increase market share and tackle the barriers standing in the way of people’s awareness of pension products.
And investors can expect to see PensionBee continue this mission through further marketing spend as well as new product launches in the near future, “so that we see more and more of that 20 year reward on investment,” Savova said.
Looking forward, the company forecast that it will deliver high double-digit revenue for the full year and will reach profitability by the end of 2023, in line with the guidance it set at IPO.