Pensions are a good thing on almost every estimate.Since the British government Introduced automatic registration Working with the workforce across the country in 2012, employers were forced to offer a workplace pension plan by default (ie opt-out). This has led more people to save for retirement.
However, this policy change means that millions of people across the country now have multiple different pension funds with different providers. Given that the average worker stays in the same job for only a few years, a new pension fund is automatically started when they are transferred to a new employer. ..
There is no doubt that some more organized workers will “integrate” their pensions as their career progresses, but for many, all they really want to do is focus on new jobs. If it is an administrative headache. This is a problem for fledgling British fintech startups. penny Is trying to solve it with an AI-powered platform that automatically integrates users’ pension funds under one roof.
“The average and hard-working person has no clue as to who their pensioners are, let alone who past employers have used as their pensioners,” Penny co-founded. Josh Stott, the person and CEO, explained to TechCrunch. “Soon, most of our net worth is scattered across different pension providers. Do you think pensioners care? Or think they’re happy to keep charging your old pension pots. Do you? “
Founded in 2019 from Bristol, Penny is now a remote-first startup with UK-based employees. The company entered the market about a year ago and claims to have helped “thousands of UK customers find and integrate everything now and in the past.” Pension fund totaling £ 50 million ($ 60 million).
Penny announced today that it has raised £ 4 million ($ 4.8 million) in seed funding to fund the next phase of growth. Google’s Gradient VenturesA handful of prominent figures in the FinTech world participated, Tom Blomfield, Founder of Monzo When Payhawk Co-founder and CEO Hristo Borisov.
Funds value Penny at £ 25m ($ 30m).
How to use
Available at, via the Penny Mobile App Android When iOSThe user has some questions such as name, mobile number, date of birth, address, national insurance number, previous job, etc., and Penny is in charge of the rest.
It is worth noting that Penny takes into account the reality that most people probably do not have information related to older annuities such as insurance policy numbers. This is one of the key differentiators to promote more established incumbents in these areas.that’s why PensionBee (Which Became a listed company last year). Penny strives to do most of the painful foot work for them.
“We knew that in order to serve individuals in the mass market, we needed to be able to find customer pension information using information that customers already knew,” Stott said. Explained. “Penny’s ability to automatically find customer pension information has allowed us to carry a lower value but a large number of customers.”
To do this, Penny uses good old AI to explore a myriad of pension data sources, some public and some private. Most of them are stored in dusty PDF format. These digital documents often contain incomplete or long-old information created by different people and organizations in different formats and languages, and are very inconsistent overall. Therefore, Penny uses Natural Language Processing (NLP) to automate the process of finding out the details of a user’s old pension. It would take too long to do this otherwise.
“We use NLP to detect and extract the correct customer data and provide information about our customers’ pension policies,” Stott explained. “Without NLP, we wouldn’t be able to process the amount of data needed to find a pension.”
Penny is very focused on pension integration, but an interesting quirk of this app is that it keeps displaying each pension individually, not as a single entity.It turns out that there’s a good reason — it’s all about how end users think About their pension.
“User testing has shown that people intuitively link their pensions to their work, not the anonymous pension system,” Stott explained. “Viewing multiple pensions as a single number actually created a negative experience for many customers, so Penny will integrate the pensions into the new pension fund, but to improve the user experience. , Keeping the pension as a separate pot within the fund. “
Of course, this is not free, but managing the pension fund is never free free effort. All pension companies charge a fee to manage the funds, and those fees obviously double more separate pensions that one has. Therefore, when Penny integrates the annuity into its own plan (managed by HSBC), these various fees will stop and instead the customer will pay a single annual fee of 0.75% of the value of the annuity.
In the near future, Penny will continue to focus entirely on the UK market. Represents the second largest pension market in the world Further after the United States Untouched pension assets In the UK, it was fixed at around £ 300bn in 2018 (although not all of these have forgotten the pension pot, some just want to increase their investment). But in some US states, California etc.Is also beginning to adopt auto-enrollment pension regulations. This could open the door for Penny to expand its reach into new areas.
“We plan to launch in California in the next few years, but now we have a special focus on our own domestic market,” Stott said.
In the near future, Penny will introduce more features into the app, including the ability to trade stocks directly from the pension pot and ultimately cryptocurrencies.
All of this guides us to the main purpose of today’s news. vis-à-vis One of Google’s venture capital divisions leading a £ 4m investment in penny. So how exactly did all this happen? It turns out that a celebrity in the FinTech world came across Penny and wrote about it in his newsletter. The newsletter was picked up by one of the gradients and contacted Stott.
“We did well. They understood the product and our ambitions,” Stott explained. “From that point on, I added them to my monthly investor updates. This seemed like the easiest way to really tell what’s going on with Penny. To raise the seed round. Before it hit the market, Gradient approached us and asked us to lead. “
AI is no longer the sole focus of Gradient Ventures when the fund was launched five years ago, but it still plays an important role in the investment philosophy that favors Penny. But like almost all investments, the most important factor is the size of the market available.
“At Gradient, we fund great teams and products in large markets,” said Darian Shiraz, general partner of Gradient Ventures, in a statement. “The pension market is trillions of dollars worldwide and access to these funds is a hassle for all savers, especially retirees.”