Not to be mistaken for the fragrant spice on which its brand name is based, Nutmeg is now the largest digital wealth manager in the UK. Founded in 2011, it offers a range of general investments and ISAs as well as pensions. Read on to find out what pension options it offers, how much you’ll pay in pension fees, and the pros and cons of Nutmeg pensions.
What is Nutmeg?
Nutmeg is one of a new breed of digital pension management firms that have sprung up over recent years to challenge what it sees as an opaque and expensive industry. It’s regulated by the FCA, and claims to offer complete transparency and, it hopes, complete peace of mind. It aims to avoid financial jargon and complex charging structures, and claims to let you set up a new pension in just a few minutes.
Nutmeg’s pensions are designed to be managed digitally – online or via an app – though it also has a customer phone line.
How does Nutmeg work?
One of the key things you need to know about Nutmeg is that it’s a robo-advisor. This may sound high-tech, but it basically means that, as with its other investment products, it uses an algorithm to select the investment portfolio your pension money is invested in. This selection is based on your answers to questions about your appetite for risk and your preferred investment style. You don’t really get “advice” as such, so if you feel like you need more tailored support and recommendations, you may wish to get personal, regulated financial advice. You’ll almost certainly pay more for this though.
The minimum investment to open a Nutmeg pension is £500. This is higher than some other challenger pension providers, so mightn’t be as suitable for anyone investing in a pension for the very first time and looking to drip-feed small amounts into it. After the initial investment, you can tell Nutmeg the level of contribution you’re happy with (up to your annual tax-free allowance), and adjust this over time if you wish.
Once your account is set up, you can log in whenever you want on web or mobile. This lets you see where your pension pot is invested, how it’s performing, and how close you are to reaching your retirement target.
If you already have a pension scheme that you’re not happy with, or if you just want to keep things simple by keeping the number of pensions you have to a minimum, you can also transfer most existing pension pots, including SIPPs, into your Nutmeg pension. The exception to this rule is some defined benefit workplace pensions. You should always take regulated financial advice before transferring any defined benefit scheme.
What does Nutmeg offer?
Nutmeg offers personal pension schemes. A personal, or “private”, pension is separate from your state pension and any workplace pension.
For some people, such as the self-employed, a private pension may be their only option. But, if you wish, you can open a personal pension (or more than one) on top of your workplace pension.
Like all personal and workplace pensions, with Nutmeg’s personal pension you’ll get tax relief on pension contributions up to a certain limit. This means that, if you’re a basic-rate taxpayer, for every £100 you pay in, the government will add £25 to your pot. If you’re a higher-rate taxpayer, you’ll need to claim back the extra tax relief via a tax-return or directly from the government.
How do I apply for a Nutmeg pension account?
You can apply for a Nutmeg pension online on the Nutmeg website. To open an account you’ll need to:
Navigate to the pension page on the Nutmeg website, and select “Open or transfer a pension”.
You’ll then need to select an investment style, the time frame for when you want to start drawing your pension, and your risk preference.
You’ll also need to choose the starting amount for your pension pot and any subsequent contributions. Nutmeg requires a minimum initial investment of £500. This can be from a direct contribution from your bank account, a pension transfer, a contribution from your employer if it pays into personal pensions, or a mix of all three.
How do I transfer another pension to Nutmeg?
If you want to transfer a pension from another provider, you start in exactly the same way as outlined above, and let Nutmeg know during the process that you want to transfer an existing pot. For each pension you want to transfer, you’ll need to supply:
The provider name
The plan number
A recent pension value.
You should be able to get these from your latest pension statements. You’ll also need to supply your National Insurance number.
Nutmeg says that most pension transfers can be completed electronically within 14 business days. It will help you with any extra paperwork that might be required. Nutmeg doesn’t charge any fees to transfer to it, but before starting the process you should check whether your existing provider has any exit fees that might make it pricey to move your money.
What pension plans are available from Nutmeg?
Nutmeg offers a choice of four investment “styles”, designed to suit different preferences. For example, there’s a “Socially Responsible” option aimed at ethical investors. There’s also a low-cost option which is run without active intervention from Nutmeg’s investment team. When you open a Nutmeg pension, you choose one of these styles. Your money will be invested in line with this.
All four plan types use exchange traded funds to diversify your portfolio across stocks, bonds, industries and countries.
Nutmeg’s pension styles
Investment style
Details
Annual management charge
Investment fund cost*
Market spread cost*
Fully Managed
Portfolios are actively managed by Nutmeg’s investment team. It makes regular adjustments to your portfolio to maximise reterns and minimise losses.
0.75% up to £100k, 0.35% above £100k
0.20%
0.07%
Smart Alpha
This plan is managed by J.P.Morgan Asset Management. It adjusts your portfolio to reflect changing market conditions with a view to delivering better returns.
0.75% up to £100k, 0.35% above £100k
0.14%
0.05%
Socially Responsible
If you choose this style, the investments in your portfolio will be selected with high environmental and social standards in mind. As with the Fully Managed style, investments are actively managed by the Nutmeg team.
0.75% up to £100k, 0.35% above £100k
0.28%
0.07%
Fixed Allocation
To help keep costs down, investments in this type of portfolio are not actively managed. Instead, your portfolio will be automatically rebalanced to match your risk level, and assets will be reviewed once a year.
Nutmeg’s choice of just four investment styles is simple and straightforward for those new to pensions, but might not be sophisticated enough for those who want a wider choice of plans.
Rival PensionBee, for example, offers seven plan choices, including a “Shariah” plan aimed at those that want to invest in Shariah-compliant companies.
And Nutmeg doesn’t offer a self-invested personal pension (SIPP) option, which lets investors select individual investments for their portfolios. SIPPs usually offer a wider and more sophisticated range of investments. If you’re a more experienced investor, head over to our SIPP comparison page to see your options.
You’ll also need to be relatively tech-savvy to take full advantage of Nutmeg’s digital platform.
What fees does Nutmeg charge?
If you open a personal pension with Nutmeg, you’ll pay three types of fee.
A Nutmeg annual management fee. As with other pension providers, Nutmeg charges this fee to pay for the administration of your investments. It’s charges as a percentage of your portfolio value. The percentage depends on the specific pension plan you choose but, for most plans, it’s 0.75% up to £100k and 0.35% beyond.
Investment fund cost. Every fund your pension pot is invested in will charge its own fees, plus you’ll incur transaction fees every time investments are bought and sold. Nutmeg’s fund costs cover these charges. Again these vary, but around 0.2% is fairly typical.
A fee to cover the effect of market spread. Market spread is defined as the difference between the price to buy and the price to sell investment assets. Nutmeg charges a fee of between 0.05 and 0.07% to cover this.
Nutmeg customer reviews
Nutmeg highlights on its website that it proactively asks customers for feedback on TrustPilot. And customer reviews on this site are largely positive. As of April 2024, it has an overall score of 3.9 stars out of 5, and 69% of more than 1,800 reviewers rate it as excellent.
Positive comments include its great customer service and how easy its platform is to use.
It’s not perfect though, with 14% of reviewers rating it as poor or bad. Negative feedback includes problems with account closure and misinformation about investment performance. Some recent negative reviews also focus on disappointing actual performance of investments, though, which is often down to volatile markets rather than the provider’s management, so should be taken with a pinch of salt. As any investor knows, the value of investments can go down as well as up.
To its credit, Nutmeg responds to the vast majority of negative reviews, which is indicative of a company that wants to learn from feedback and to improve.
Does Nutmeg have an app?
Yes. Nutmeg’s free app is available for both iOS and Android smartphones. Its app lets you check how your pension pots are performing, adjust your preferences, and manage contributions.
Both its iOS and Android apps are highly rated, scoring 4.8 and 4.4 stars out of 5 respectively.
Pros and cons of Nutmeg
Pros
Easy-to-use digital interface. You can monitor and manage your scheme from your computer or smartphone.
Clear fee structure. Nutmeg aims to be very transparent about its fees. They’re broken down into a annual management charge, fund charges and market spread costs.
No exit fee. If you want to transfer your pensions away from Nutmeg, you can do so fee-free.
Simple choice of investment styles. Nutmeg makes it pretty straightforward for novices to get started with a pension.
Cons
Relatively high minimum contribution. For those just starting to save into a pension and wanting to drip-feed money in, the £500 minimum initial contribution may be off-putting.
Simple portfolio choice may not suit more sophisticated investors. If you want to have more control over your pension investments, consider a SIPP instead.
Our verdict: Is Nutmeg any good?
If you’re looking to open a personal pension and have a minimum of £500 to contribute, Nutmeg could be worth considering. It’s straightforward, transparent and easy to use, allowing you to keep a watchful eye on your pension performance via its website or app. And you can transfer pensions in from other providers if you want to. Check how it compares to other pension providers in our pension comparison.
Frequently asked questions
To pay into your Nutmeg pension you’ve got three options:
Set up personal pension contributions.
Get your employers to pay into your pension.
Transfer an existing policy from another provider.
Yes. Subject to the pension provider’s own rules, you can transfer any defined contribution pension scheme to Nutmeg, and many defined benefit workplace pensions too. The main exception is local authority pensions, which can’t be transferred under government rules.
No. Nutmeg doesn’t charge any fees to transfer other pensions to it, or to transfer your Nutmeg pension away from it. Bear in mind that the provider you’re transferring from or to may charge transfer fees though, so check this before going ahead in case it affects your choice.
Nutmeg says that most transfers should happen within 14 business days (so two or three weeks).
Nutmeg is authorised and regulated by the Financial Conduct Authority, and client money (including pension investments) is ringfenced and protected in a separate account from its business operations. Plus, Nutmeg is a member of the UK Financial Services Compensation Scheme (FSCS). This means that, should Nutmeg go bust, you should be able to claim compensation for any pension savings that are lost up to a maximum of £85,000. However, as with any investment, the value of your pension may go down as well as up in line with market fluctuations.
If you’re not happy with Nutmeg for any reason – for example if you think that it has not invested your money in accordance with your stated preferences – you should complain directly to it in the first instance. If you’re not happy with its response, after 8 weeks you can escalate your complaint to the Financial Ombudsman Service.
In addition to its robo-advice service, Nutmeg also offers a restricted, regulated financial advice service. For a fixed one-off cost of £575, a Nutmeg financial planner will work with you to review your current situation and goals. They’ll put together a tailored financial plan with recommendations to achieve your objectives. Bear in mind it will only be able to advise on its own investment products and services though. If you think you need personal advice that goes beyond the limits of this service, you may wish to speak to a regulated financial adviser that is able to make recommendations on the whole pension market.
Pensions are long-term investments. You may get back less than you originally paid in because your capital is not guaranteed and charges may apply. Keep in mind that the tax treatment of your pension and investments will depend on your individual circumstances and may change in the future. Capital at risk.
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Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes. See full bio
In this guide, we break down the pension offering from the online provider PensionBee, including a look at its history, fees, frequently asked questions and more.
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