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For business owners, freelancers and contractors, fluctuating monthly income means that an immediate safety net of savings is often prioritised over their pension. Penfold, a pension provider for the self-employed, is designed with that challenge in mind. And as the latest addition to the Starling Marketplace, where you can browse third-party providers and services, it’s even simpler to start saving for your future.

Why pensions matter

Pensions not only allow you to set money aside for retirement, they also exist as an efficient, long-term investment. Paying into a pension is very tax efficient. You either receive the government’s tax relief top-up of at least 25% of your contribution, or potentially a reduction to your limited company’s annual tax bill. Of the five million people who are self-employed, just 15% pay into a pension, meaning that thousands are missing out on those tax benefits and the opportunity to increase their financial security.

What Penfold offers

Penfold has been designed for people who are self-employed and want to save for retirement, even when their monthly income fluctuates. Their pension plans can be paused or altered at any time from the Penfold app or from the online portal - there’s no need to speak to anyone or wait for changes to be approved. There are no extra fees to make changes, just a flat fee of 0.75% per year based on the average value of your pension. Tax relief is organised for you and automatically added to your pension pot and you can start withdrawing funds at 55.

Like Starling, Penfold avoids complicated terms and jargon where possible. And by setting up the integration through the Marketplace, you can see the total amount in your pension pot, your monthly contribution and any growth, right in the Starling app. All this information is pulled directly from Penfold.

“I love what Starling does for business owners,” says entrepreneur Alice Benham. Through her business, she offers digital marketing coaching and retreats, primarily for fellow young, female business owners. She also hosts the business podcast Starting the Conversation.

She signed up to Penfold in January when she saw a post on Twitter and set up her Starling business account in March. “I chose Starling because it was a female-founded bank and I picked Penfold because it focused on small business owners and acknowledged that being self-employed is very different to being employed. I liked that it spoke in a language that made sense. Their tone of voice is down to earth but not patronising,” she says.

“I didn’t have a pension at that point, but once I signed up I couldn’t understand why getting a pension wasn’t something business owners spoke about more. I use the Starling app all the time so the integration will get my pension in front of me and encourage me to add to it - I need savings to be out of reach but still in sight.”

Alice benham
Alice Benham, entrepreneur, digital marketer and podcaster

Alice secured her first freelance contract in social media when she was just 17. Over the last five years, she’s taught herself digital marketing and worked 1:1 with almost 100 business owners. Her group programmes have benefitted more than 250 business owners. She hired her first employee in 2019 and has a second team member joining this summer.

“The coronavirus hasn’t hindered our growth but it’s forced us to get more creative,” says Alice, 22. The time she would have spent planning in-person events has been channelled into creating practical, honest podcasts to support small businesses.

She’s also worked with more business owners to develop their online presence. “Marketing is the voice of a business and I believe it’s best done by the business themselves. My role is to help people fill in the gap between where they are now and where they want to be. No one knows your business as well as you do - you just sometimes need support.”

Setting up a pension with Penfold

A pension with Penfold is even quicker to set up if you’re a Starling business customer and you go through the Marketplace. With your permission, we’ll automatically fill out details such as your name and address to save you extra form-filling. Then it’s up to you to choose details such as the amount you’d like to contribute each month and which day you’d like to make the payment.

“The appeal for me was the flexibility,” says Frankie Tortora, freelance graphic designer and founder of the freelance-parent community Doing It For The Kids (DIFTK), which has more than 6,000 members on Facebook and 12,000 followers on Instagram.

“Beyond the state pension, I never had a pension until I signed up to Penfold last year. I’ve been freelance for nearly eight years but like so many people, I put it off. In my role running the community, I recognised pensions as an issue that we really needed to sort out - lots of people are worried about it, including me,” she says.

“When I signed up, I felt like a weight had been lifted. How much I earn fluctuates month to month, as well as year to year thanks to having kids. I have a monthly direct debit but I can change how much goes out if needed, pause it or top up if I’ve earned a lump sum.”

Since lockdown, almost all of Frankie’s time has been dedicated to looking after her two children but she’s managed to keep recording the DIFTK podcast, which won Bronze for Best Business Podcast this year at the British Podcast Awards. She co-hosts the podcast with freelancer Steve Folland and covers everything from explaining your job to your kids to making sure you have a financial safety net.

DIFTK podcast hosts
Steve Folland and Frankie Tortora, hosts of the DIFTK podcast, photo credit: Sian Parker

Helping you calculate how much to save

Setting up a pension is part of your financial safety net. If you’re not sure how much you can afford to save or how much you need for retirement, you could have a look at Penfold’s calculator. Simply enter your age, annual earnings and current pension pot and Penfold will help you choose a monthly contribution based on that information. There’s no minimum for monthly contributions. If you already have a pension, you could use the free Penfold switching service to combine your old pot with your new one. You don’t have to, but the option is there for those who want to have everything in one place.

Knowing how and where your money is invested

At Penfold, transparency is everything. That’s why the team outlines details of the four investment plans before you sign up to help you choose. Investments are managed through its partner BlackRock, a global asset manager. An additional plan, focusing on sustainability, is due to launch later this summer.

Remember that pensions are investments so capital is at risk - the value of your money can go up and down. Your current pension value is shown when you sign into Penfold or check in the Starling Marketplace - this integration is all about clarity and control.

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