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United States Lloyds Bank launches first-of-its-kind 'ready made' pension service
Lloyds Bank customers will now be able to combine their existing pension pots or open a ready-made pension through their mobile banking app or internet banking.
Lloyds Bank has teamed up with Scottish Widows to launch an app-based pensions service called Ready-Made Pensions.
The service will allow pension savers to consolidate up to 10 existing pension pots, or create a new pension pot with Scottish Widows through their Lloyds Banking app which is tailored to their age and retirement plans.
The service will be available to Lloyds Banking Group's 21.5million customers, including those with Lloyds Bank, Halifax and Bank of Scotland. It is the first time a big bank has launched a ready-made pension product of this kind.
Lloyds Bank has become the first big bank to launch a ready-made pension service which will be available to 20million customers across Lloyds, Halifax and Bank of Scotland
Customers can open a ready-made pension with a minimum of £5,000 or set up monthly contributions from £150 a month.
Existing pensions of £10,000 or more can be transferred in.
The launch comes as new research shows that 47 per cent of UK adults wish to manage their pension through their banking app.
A further 50 per cent say they would engage with their pension more regularly if it were accessible via their banking app.
Jo Harris, director at Lloyds Bank said: 'We wanted to create a pension product that was genuinely easy to use, simple to access and removed and removed all the jargon which can be so off putting.'
The ready-made pensions product could be especially useful for self-employed people, who don't benefit from being auto-enrolled into a workplace pension scheme.
Between April 2018 and March 2020, only 20 per cent of self-employed people paid into a pension compared to 80 per cent of employees, figures from Lloyds suggest.
Jackie Leiper, managing director of pensions at Lloyds Bank said: 'There is a real opportunity for Ready-Made Pensions to help self-employed people - for many of this group their business is their pension.
'Those who are self-employed have been overlooked in the discussion of saving for retirement. Traditionally, up until now. self employed people have had to take financial advice to get started with investing in their pension.'
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Henry Tapper, founder of pension comparison service AgeWage said: 'It seems big banks are finally arriving into the 21st century when it comes to pensions.
'It is good to see that banks are waking up to the fact that they have have some muscle, but I'm not overwhelmed.
'PensionBee has been doing this for some time, and doing it well but that said Lloyds Bank's offering is good news for savers, especially if they fancy having a Scottish Widows pension with their bank.'
'I'd consider a pension on my banking app'
A select number of customers have already been able to sign up to Lloyds' pensions service, but it will be officially launched from today.
Lloyds Bank said uptake so far been strongest amongst those in their forties. The youngest person to sign up for the service is aged 18.
We spoke to one younger pension saver who said she would be keen on the idea.
Lauren May, aged 32 from West London has been auto-enrolled in a workplace pension at Anthony Ward Thomas provided by Scottish Widows for the last 10 years.
Ms May told This is Money that she does not have a personal pension because she wants to prioritise her other savings, including Premium Bonds.
She said: 'I tend to check on my workplace pension every month and find it reasurring to see that there is a sum of money growing there for my retirement when that time comes.'
Ms May said she finds it easier to save into her workplace pension because it contributions come out of her salary automatically and she doesn't have to think about moving any money to a different account.
She said: 'I did swap from my workplace pension contributions to saving in a personal pension for a time, but that didn't really work out because I would overlook my pension savings one month if there was something else I needed to save towards more.
'I think I would be more likely to open a personal pension if I could get one through my banking app because it would be easier for me to have it alongside my savings account and current account, in one place where I could easily see it.'
What are the fees on the Ready-Made Pension?
Lloyds Ready-Made Pensions will have an annual account fee of 0.3 per cent, or a minimum of £5 a month.
The ongoing investment charges are 0.24 per cent and there is a transaction cost of 0.14 per cent.
Pension Bee's fee structure, by comparison, decreases the bigger your pot is. Depending on the plan, pension savers will pay between 0.50 per cent and 0.95 per cent. This halves on the portion of your savings over £100,000.
There are no drawdown fees and no exit fees with Lloyds Bank's ready-made pension service.
Tapper said the offer seemed 'reasonably competitive' compared with the rest of the market.
