penfold closes $8.5m to provide a full-stack pension in an app aimed at freelancers

Penfold Secures $8.5 Million Funding to Revolutionize Freelancer Pensions

Penfold, a fintech startup delivering a complete pension solution via a smartphone application, has successfully completed an $8.5 million (£6 million) funding round. A significant portion, $4 million, originated from a crowdfunding initiative.

The company has now received authorization from the FCA to directly manage pensions, eliminating the need for third-party administrators. This offering is specifically designed for freelancers, a demographic often characterized by infrequent savings habits.

Investment Details and Company Vision

Bridford Group spearheaded the investment round. Penfold’s CEO, Pete Hykin, explained that the company constructed its core infrastructure independently.

He contrasted this approach with established pension providers, which he described as being built upon “hundreds of consolidated schemes,” frequently relying on paper processes and substantial administrative staff.

Addressing the Challenges of Traditional Pensions

Hykin highlighted personal experience with the difficulties of setting up a pension through traditional channels. He recounted multiple unsuccessful attempts with companies like Scottish Widows, Standard Life, and AJ Bell.

These attempts were hindered by requirements for physical paperwork, phone calls, or engagement with financial advisors. He also noted low engagement rates with workplace pensions at a previous employer, resulting in unclaimed funds.

A Tech-Driven Solution for Modern Pensions

“We rebuilt the entire back end of pensions,” Hykin stated, “to enable instant, rapid, flexible, and cost-effective processes.” This was coupled with a user-friendly experience through a dedicated app and responsive customer support.

Key features include the ability to locate, monitor, and consolidate existing pension schemes.

How Penfold Works

Users initiate the process by downloading the app and providing essential KYC (Know Your Customer) information. They then select from five investment plans tailored to their age and risk tolerance.

Funding options include recurring direct debits, open banking transfers, and the consolidation of existing pensions. Users subsequently benefit from HMRC’s 25% contribution until retirement.

Powerful Pension Tracking Tool

A particularly valuable feature is the “Find my pension” tool. By simply entering a former employer’s name, users can locate and reclaim previously held pension pots.

Competitive Landscape

Penfold’s competitors encompass established financial institutions such as Standard Life, Scottish Widows, Aviva, and AJ Bell.

The trend towards app-based pension management is gaining momentum, as evidenced by PensionBee’s recent listing on the London Stock Exchange and their own self-employed pension offering.

Fee Structure and Leadership

Penfold operates on an annual percentage fee of 0.75% of the pension balance, with no additional charges. The founding team includes Chris Eastwood (co-founder and co-CEO) and Stuart Robinson (co-founder and CTO).