NatWest shakes up pensions market with £5,000 incentive
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High street bank NatWest has launched a pensions product for its banking customers, allowing those that “don’t need or want” advice to open a new pension or transfer their old pensions into a single product and receive up to £5,000 for doing so.
NatWest appears to be anticipating growing demand for consolidation as the defined contribution market matures and as government and industry are driving various engagement campaigns. However, the launch also comes amid a deepening cost of living crisis, with rising numbers of people pausing their pension contributions to pay bills.
All NatWest banking customers that are not taking up financial advice can now open a new pension or transfer their old pensions into a single product and receive up to £5,000 – depending on the amount transferred – if they do so by 11 November, according to the bank, which said a transfer can be done “quickly and easily online providing the benefits of a low-fee product”.
Its pension will include five funds managed by wealth manager Coutts, investing in a range of sustainability accredited funds. The ready-made Coutts funds contain varying proportions of equities, bonds and cash via underlying tracker funds and ETFs. The ongoing charges are capped at 0.5% per year.
Its pension will include five funds managed by wealth manager Coutts, investing in a range of sustainability accredited funds. The ready-made Coutts funds contain varying proportions of equities, bonds and cash via underlying tracker funds and ETFs. The ongoing charges are capped at 0.5% per year.
Nick Johnson, head of digital investing at NatWest Premier, said the offering aims to help people take control of their future retirement plans whilst putting some money back in their pocket.
Half of pension holders have not tried to consolidate pensions
A survey of 2,319 adults the bank commissioned from Ipsos Mori found that more than half (55%) of those who have workplace or private pensions have two or more of them, yet half of these 50% have not attempted to consolidate their pensions. Reasons given include they have never felt the need (27%), they don’t think it will benefit them (22%), they don’t know how to approach this (18%), they think the process is too risky (13%) or they find dealing with their pension too daunting (12%), among other reasons.
NatWest said its new pension product aims to address these issues, making it quicker and easier to consolidate pensions into one pot that can be managed online. It has called on people to prioritise their pensions despite double-digit inflation, after finding that 17% of those with a workplace or private pension have reduced, frozen or stopped their contributions in the last six months as a direct result of the cost-of-living crisis.
The bank said that “by doing so they risk losing out from the best investment product they could ever have”, thanks to its tax efficiency, employer contributions and the benefits of compound saving. It calculated that a basic rate taxpayer in a workplace scheme who pauses their pension for three years and saves themselves £100 per month would reduce their retirement savings by £29,000 if they were to retire 30 years later, and a higher rate taxpayer would lose even more.
“We know our customers are looking for ways to reduce their bills. While it may be tempting to cut back on pension payments now to ease the cost of living, this should be a last resort,” said Johnson.
What does NatWest’s entry into the pensions market mean for competition?
