PensionBee boosts asset base

The chancellor’s abolition of the lifetime allowance, which removes the upper limit on how much savers can put into their pension over the course of their lives before they face a tax penalty, couldn’t have come at a better time for PensionBee (PBEE), as the pension consolidation specialist aims to build its market share to 2 per cent of the total market over the next few years. The start up, which listed in April 2021, is unlikely to be troubled by reported profitability this year, but its headline sales growth suggests there is pent-up demand for its services – as anyone who has had dealings with multiple pension providers can testify. So for the most part the company is still all about future promise and current losses, but that situation could easily change.

Assets under administration (AuA), the total of all pensions transferred to the platform, increased by 17 per cent during the year to end the period at £3bn – which represents about 183,000 invested customers – although net inflows were 10 per cent lower at £863mn. Customers are consolidated into an online platform and then handed on to third-party managers to manage. PensionBee itself charges fees as a percentage of AuA in a recurring annual charge, which works well with the current 97 per cent customer retention rate. The current realised AuA margin rate was largely stable at 0.63 per cent, although this apparently represented the discount given for managing larger pension pots.

The forecasts, as they stand, predict profitability for PensionBee by the end of 2024. This will depend on whether it can automate its processes further to prevent costs simply rising in line with sales. Hold.

Last IC View: Hold, 144p, 17 Mar 2022