Investing app enters Sipp market

Investing app enters Sipp market

Moneybox, a mobile micro-investing app, is working on launching its own self-invested personal pension (Sipp) in the first quarter of 2019.

Ben Stanway, co-founder of Moneybox, told FTAdviser that the Sipp will work as a consolidator of old pension pots.

He said: "A pension is the second or third biggest financial asset of a person in their life.

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However, there is a staggering level of low knowledge about pensions.”

Launched in 2016, the Moneybox app offers currently four different investment products – a stocks and shares Isa, a Lifetime Isa, a Junior Isa, and general investment accounts.

The app can be linked to an online bank account and allows card payments to be rounded up to the nearest pound. The digital spare change is then invested.

The fintech company is now working on having all the regulatory permissions to launch its own Sipp, which will invest in well-known funds in the market, Mr Stanway said.

The pension product, however, will only accept transfers from defined contribution schemes.

Mr Stanway argued the new Sipp is primarily targeted to the firm's current 100,000 customers.

It will be easier to track old pension pots for them, since they have provided the firm with essential data, such as their National Insurance number when they set up their Moneybox account.

However, the new Sipp will be available to new customers as well, and it will be set up "in an easy to understand way," he said.

Mr Stanway said that a pension product is the next natural step for the company, since most of Moneybox clients will have different pension pots, due to auto-enrolment.

According to data from The Pensions Regulator (TPR), auto-enrolment is now covering more than 1.2 million employers and more than 9.6 million people are enrolled in a pension scheme.

Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, argued that Moneybox new pension product has got "the right intentions to help individuals to simplify their pension arrangements and consolidate ‘stray’ pots".

He said: "However, the danger is that in many instances, these “old” pension pots are not straightforward and by transferring them the members could lose a lot of valuable benefits, such as guaranteed annuity rates, protected tax-free lump sums greater than 25 per cent and so on. 

"So Moneybox needs to be careful on how they manage this and should clearly signpost for individuals to take financial advice if they are unsure."

Steve Carlson, chartered financial planner at Cardiff-based Carlson Wealth Management, said that solutions like the one Moneybox is proposing "can be ideal for those who wish to consolidate very small pots, or for those who are many years away from retirement and just require a simple solution to invest a small amount of money".

However, Mr Carlson said he would be very cautious about consolidating pensions when the values get larger without reviewing properly first, as they can have extremely valuable features such as guaranteed growth rates that could be lost.