How PensionBee's plans performed in 2020 (as at Q4)

Priyal Kanabar

by , Customer Insights Manager

at PensionBee

27 Jan 2021 /  

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2020 was a challenging year for both public health and the global economy, resulting in widespread changes to lifestyle and employment. Regulatory approval and the subsequent rollout of vaccines at the end of last year gives hope that the end of the pandemic is on the horizon. Nevertheless, economic fallout from the crisis will continue for some time and investors continue to experience some degree of market volatility, no matter where their pension savings are invested.

We began producing quarterly performance updates in response to feedback that you would like to see the performance of your plan relative to our other plans. We provide this regular summary so you can do just that, as well compare the performance of your plan with UK and US stock markets. We use these market comparators because they measure the performance of the biggest companies based in the UK and USA respectively and because most of our customers have a significant portion of their pensions invested in shares of UK and US-based companies. As our plans are diversified, all our customers are invested in a mixture of geographies and asset classes.

In 2020 the UK stock market performed at -12%, whilst the US stock market returned 18%. Against this backdrop all our plans performed well, substantially outperforming the UK stock market thanks to the benefits of diversification. It’s good to remember that your pension is a long-term investment and keep that in mind when considering short-term performance. For example, in the last five years our plans have experienced growth ranging from 5% to 10%, which should put our customers in good stead to build healthy retirement nest eggs. PensionBee is proud to offer long-term financial products in partnership with the world’s largest money managers, BlackRock, State Street Global Advisors, HSBC and Legal & General.

Driving positive change

Throughout 2020, our money managers have been incorporating more analysis of the societal and environmental impact of companies in decisions about how to best invest your money. Your voices and determination have played an important role this year in driving this change. In early 2020 we learnt that the majority of customers who responded to our survey on responsible investing wanted to balance making money with creating positive societal outcomes. These views also reflect the government’s climate-change related amendments to the Pension Schemes Bill, which will soon be law for all workplace schemes.

We took evidence of these views to our money managers and shared our PensionBee vision that everyone should be able to look forward to a happy retirement. Money managers have the power to influence the behaviour of the companies they invest your money in, and affect change by voting with or against management. We believe that responsible corporate behaviour is a key indicator of future profitability of investments.

Your money managers also recognise the long-term financial risk of investing in companies that harm society and the planet. In 2020 State Street Global Advisors added screens to ensure that your money can’t be invested in companies that repeatedly violate the UN Global Compact, or in companies that produce controversial weapons. BlackRock also added these exclusionary screens to the Tailored Plan, as well as screens for companies that sell tobacco, civilian firearms and tar sands / coal.

For customers who want stricter exclusions now we were very proud to announce a new responsible plan in 2020. We worked with Legal & General Investment Management to launch our new Fossil Fuel Free Plan, to exclude companies with proven or probable reserves in oil, gas or coal, tobacco companies, manufacturers of controversial weapons, nuclear weapons and persistent violators of the UN Global Compact. The plan is also designed to invest more of your money in companies that are aligned with the Paris climate agreement.

This is the beginning of our journey, one that will be led by you. We’ll keep listening and influencing the industry to invest your money in building a better world that leads to a more prosperous retirement.

Finally, we also saw another new plan launch in 2020, our Pre-Annuity Plan, as part of the FCA’s Investment Pathways for customers over 55. This plan aims to provide a return that broadly corresponds to the cost of purchasing an annuity. It works by investing your money into a more stable type of asset called bonds. The plan returned 14% in 2020, and 61% since 2016.

Remember that past performance is not a guide to future performance and this blog has solely been prepared for informational purposes and not with the intent to influence future investment decisions. As with all investments capital is at risk.

Savers under 50

Plan / Index Money manager Performance over 2020 (%) 5-year annualised performance (%) Proportion equity content (%)^^
UK stock market^ N/A -12% 5% 100%
US stock market^ N/A 18% 15% 100%
Shariah^^^ HSBC (traded via SSGA) 23% N/A 100%
Tailored (Vintage 2037-2039) BlackRock 9% 10% 78%
Tailored (Vintage 2043-2045) BlackRock 8% 10% 90%
Future World^^^ Legal & General 7% N/A 100%
Match BlackRock 4% 9% 70%
Tracker State Street Global Advisors 2% 9% 80%

Sources: Yahoo Finance, Investing.com and direct from the money managers. The performance of BlackRock plans are reported as net figures, and all others are gross figures. ^Price taken on the first open day of Q1 2020 and 2016. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property. ^^^The Shariah and Future World Plans were launched in 2016 and 2017 respectively and 5-year performance is not available yet. The Fossil Fuel Free Plan launched in December 2020 and as yet there is no performance data available.

Savers over 50

Plan / Index Money manager Performance over 2020 (%) 5-year annualised performance (%) Proportion equity content (%)^^
UK stock market^ N/A -12% 5% 100%
US stock market^ N/A 18% 15% 100%
Pre-Annuity State Street Global Advisors 14% 10% 0%
Tailored (Vintage 2019-2021) BlackRock 9% 8% 40%
Tailored (Vintage 2025-2027) BlackRock 9% 8% 53%
4Plus State Street Global Advisors 3% 5% 61%
Preserve State Street Global Advisors 0% 1% 0%

Sources: Yahoo Finance, Investing.com and direct from the money managers. The performance of BlackRock plans are reported as net figures, and all others are gross figures. ^Price taken on the first open day of Q1 2020 and 2016. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property.

An important note of caution: It’s impossible to forecast what will happen from quarter to quarter, and past performance should never be used to predict future performance. However, it’s reasonable to prepare ourselves for further disruption as coronavirus has continued to have an impact on the global economy. When markets fall, it’s tempting to consider withdrawing your money to protect it or moving it to lower risk investments, however, there’s a risk that investments could be sold at a loss and you may miss out on any increases in value in the future when markets recover.

On the contrary, when markets aren’t doing well, there are more opportunities for investors. If you make regular contributions to your pension, you may wish to increase your contributions as you’ll be able to invest at lower prices than before the market downturn.

For our customers who are already in retirement and are perhaps thinking about withdrawing all of their pension as a result of the downturn, we hope that you will take comfort in the range of plans we have on offer. You may want to consider only drawing down what you need and keeping a close eye on the markets. Our Investment Pathway guide can help you select a plan based on your personal retirement aims.

We will continue to keep you regularly updated on what’s happening with your savings and if you have questions about your plan’s performance, or anything else, you’re welcome to get in touch with your BeeKeeper.

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