Online pension app Pensionbee expands into US market

Online provider Pensionbee has launched in the US, entering the world’s largest defined contribution market for the first time.

The pension company confirmed that its US subsidiary has been registered with the US Securities and Exchange Commission.

The US is the largest defined contribution market, with £17.7 trillion in assets, or 80 per cent of the global total.

Pensionbee expects rapid growth in the US and aims to manage the equivalent of between £15.4bn and £19.3bn in defined contribution assets over the next decade.

This would put it on par with its UK subsidiary.

Pensionbee is an app that brings together contributions in one place.

In the UK, it has £5bn of assets under management, with more than 250,000 invested clients.

Founded in 2014, the platform allows users to contribute whatever they want and begin withdrawing funds when they turn 55.

Defined contribution pensions are based on what people pay in; defined benefit plans are generally workplace pensions based on salary and time worked there.

The company makes money by charging a periodic management fee. Share rose 8.7 per cent, or 13.5 pence, to 168 pence yesterday and are up more than 70 per cent this year.

When Pensionbee announced its plans to take over the US in March, its chief executive Romi Savova said it would be a “transformative step.”

Yesterday, Savova said: “Our vision is a world where everyone can enjoy a happy retirement.”

He added: “Many consumers still struggle to adequately prepare for retirement amid a variety of confusing and opaque investment options.”

Pensionbee wants to continue to grow its presence in the pensions market. It hopes to achieve a 2% share of the £1.2 trillion pensions market over the next five to ten years.

And in good news for its investors, it expects to be profitable in the UK throughout 2024.

Its share price has recovered after Liz Truss’s mini-budget sent it into a tailspin. It is now just 0.7% cheaper than when it debuted in 2021 at an initial valuation of £365m.