This is the final part of my three-part review of PensionBee.
This week, I’m focusing on how well my pension portfolio actually performed over the last year.
This is by no means a scientific examination of the results, because a myriad of things can affect how well a portfolio performs.
But having trusted my portfolio with PensionBee and its money managers for more than a year, it’s a good time for a review of their performance.
An overview of markets in general
Before I go into how my portfolio performed, it’s important to note that the last year has been particularly volatile.
The financial markets in general have seen substantial growth since they crashed in March 2020 in response to Covid.
But high levels of inflation, particularly high energy costs, has been making investors nervous.
Markets are sensitive to change and uncertainty.
When you look at values of funds over the last year, there’s been a monthly dip correlating to big announcements by central banks.
In February, the markets crashed again when Russia invaded Ukraine – and it’s only just beginning to recover.
All that is to say it’s been an uphill battle for investing.
How my PensionBee self employment pension has performed
In short, not great.
As a reminder, I’m on PensionBee’s Tracker plan, which is a medium risk fund managed by State Street Global Advisors (SSGA), one of the world’s biggest asset managers.
They have plenty of experience, but with a fund that size, it can also be hard to manoeuvre in response to changes in the market.
In the first couple of months after opening my account, my portfolio was on an upward trajectory but the growth was incredibly slow.
Between July and the beginning of November 2021, it was hitting just 1 or 2% of growth, with the occasional fall.
By November, things were finally picking up and I saw growth highs of 5%.
But that was short lived, and growth rates soon returned to that stagnant 1% mark.
And when the war in Ukraine started, the value of my investments across the board dipped – that means at PensionBee and elsewhere.
At one point in June this year, I saw a 15% fall in the value of my PensionBee portfolio, equating to thousands of pounds.
It’s still recovering. And a year on, my portfolio is worth about 7% less than what I had put in.
But I want to add a bit of context to this with some comparisons to my investments elsewhere.
PensionBee vs Nutmeg
I opened three fixed-allocation investment pots with Nutmeg at around the same time as opening my PensionBee portfolio.
Nutmeg’s management fees for these pots are just 0.45%, as they’re more hands off, with minimal portfolio adjustment.
In each of these pots I deposited the same amount of money (as each other, rather than PensionBee) and set the investment approach to three different risk profiles: medium, high and very high.
I’ll have a fuller review of this experiment from next week but the results offer a decent comparison.
While my PensionBee portfolio was languishing, my riskiest portfolio was seeing growth highs of 7%. Even the medium risk pot was seeing growths of around 3%.
They too were affected by the dips across the market.
At its lowest point, the medium risk pot (the worst performing one) had hit a loss of around 12% – things were bad, but not quite as bad as my PensionBee portfolio.
Currently, the riskiest portfolio is on a growth spurt of almost 2% while the medium risk portfolio is at a loss of just over 5% – both outperforming my PensionBee portfolio.
PensionBee vs other pensions
You may recall that I had a couple of other pensions with another provider that I decided not to transfer.
The comparison isn’t quite as clear cut here because the sums invested in them are vastly different and the original investment dates are also different.
Case in point, two of these pension pots were invested in the same fund but at different times.
While one saw overall growth of more than 9% in the last year, the other had a negligible 0.69% growth – an example of just how much the value of a portfolio can be influenced by different factors.
That said, both portfolios did see growth at a time when my PensionBee portfolio saw an overall fall.
Would I recommend PensionBee?
My experience with PensionBee over the last year has been very mixed.
While my first pension transfer went through without issues, my second one wasn’t quite as straightforward.
And if I hadn’t chased it at just the right time, it wouldn’t have gone through at all.
A 50% hassle-free transfer rate doesn’t look great but it’s also not enough to swing me the other way – because to be fair, PensionBee rectified the issue as soon as I got in touch.
Ultimately it comes down to performance and in my opinion, my portfolio has underperformed in the last year.
Given the Tracker plan is managed by SSGA rather than by PensionBee, the blame rests with the former.
That said, in a perfect world I would have wanted a more risky investment approach but that’s not an option with PensionBee unless I switch to a different plan, which would incur a higher fee.
With its competitors, the fee would stay the same regardless of how risky your investment outlook is so you have a bit more flexibility.
Remember, when I picked PensionBee last year, there was very little difference between it and its competitors for me so there’s little to dissuade me from switching to another provider.
And if I’m honest, that’s the plan as soon as my portfolio recovers to a reasonable state.
While PensionBee hasn’t worked out for me, it doesn’t mean it won’t work for you – PensionBee also offers other plans that may have performed better.