Here we look at Cushon – an app that offers workplace savings and investments, and the ‘world’s first’ net zero pension.
UK-based fintech Cushon works with employers to make it easy for people to save and invest their money direct from their pay. It offers a range of ISAs, and in January 2021 launched the ‘world’s first’ net zero pension.
Founded in 2017, Cushon now has more than 220,000 customers with around £740 million of assets under management. It works with 190 large companies such as Heineken, Just Eat, Sage, FSCS, Experian and KFC, and around 8,000 smaller employers across the UK.
Cushon’s groundbreaking Net Zero Now pension accelerates a drive by the industry to green investment portfolios and reduce holdings in companies that damage the environment. Its name marks its position ahead of many larger pension fund providers that have committed to targets to reach net zero – and be neutral on carbon emissions – only by 2030 or even 2050.
Currently the pension is only available to workplace savers via their employers, but Cushon plans to offer it to direct investors through a self-invested pension (SIPP) by early next year.
Cushon’s mobile app takes you on a simple, interactive journey to save and invest a portion of your salary, set targets, and keep track of your money as it grows.
If your employer has signed up to Cushon, you can pay as little as £10 a month direct from your salary into a tax-free ISA – or for those who have used up their yearly ISA allowance, a General Investment Account (GIA). The ISA and GIA are also available to private investors with a minimum monthly contribution of £50 a month.
Cushon keeps things easy by setting up your account as a Stocks and Shares ISA, even if you want to keep your money in cash. You can choose to invest some or all of your money and don’t have to switch accounts to invest, or hold a separate Cash ISA.
Within your ISA, you can set up as many separate ‘pots’ as you like. This means you can create individual pots for different savings goals, invest and save your money across a range of different funds, and at different levels of risk.
Overall, it gives you control of your financial future while making the process of saving and investing simple, accessible.. and even fun.
Sustainable investing option
With its ISA, Cushon is a ‘whole of market’ provider offering around 1,000 funds from 90 fund managers. However, it does make it easy for customers to choose to invest ethically.
Its Self Select range (a pick-and-mix option for more experienced investors, where you choose your own funds) offers an ‘Ethical only’ filtering tool. Cushon includes funds here which have an environmental, social and governance (ESG) focus, and you can choose those that match your values as well as your financial goals. Of the 1,000 funds, 60 are deemed as ethical.
If you prefer a ready-made ‘CushonMix’ portfolio, there is an ethical option with four risk-levels to choose from. The fact that some funds within the ethical portfolio are actively managed means it comes with a slightly higher charge compared to the others, but also greater potential for making a positive impact on the planet.
With its new net zero pension, Cushon has stolen a march on its competitors in the sustainable arena. It’s unique in being net zero now – not later – unlike others in the market who have instead chosen to adopt long-reaching targets to achieve the same status by 2030 or even 2050.
Cushon reduces as much of the overall carbon emissions from its investments as possible by choosing companies that generate less carbon (without, it says, compromising on returns). Whatever can’t be eliminated through the fund, Cushon offsets by contributing to carbon-offsetting projects.
Unique selling points
- The Net Zero Now pension is a world first, according to Cushon. Film writer Richard Curtis, co-founder of Make My Money Matter, which has been campaigning for pension funds to commit to net zero immediately, says: ”The launch of a pension that is net zero now – not later – shows what is possible from the pensions industry when tackling the climate emergency is taken seriously.”
- Cushon was the first to launch a mobile app that enables people to save directly from their payroll, and the first to launch a workplace Lifetime ISA.
- Cushon’s unique algorithms review your investments’ projected returns, charges, performance, and risk level daily. A ‘CushonMe’ feature alerts you if it calculates that you should make a change to your investments based on this review. You will only receive an alert if your investment has passed through a “significant threshold” that gives cause for your attention, and can anticipate an alert on average every six to 12 months.
The plus points
- Cushon enables you to save and invest in an ISA and/or pension directly from your pay check.
- You can pick individual investments yourself, or go for a ready-made ‘CushonMix’ portfolio. These are selected using a mathematical algorithm that, according to Cushon, maximises diversification and finds the highest possible projected return at your chosen level of risk.
- An in-app shareholder voting feature lets customers have their say on how investments will be used in the companies they help fund.
- App content feeds share news, photos and progress on Cushon’s environmental offset projects.
- The ‘Ethical only’ filtering tool for the ISA includes a range of 60 funds that claim to have a sustainable focus. Some of these will be better than others (some may screen out polluting industries while others will actively aim to make a positive difference), so it’s wise to look carefully at the funds you put into your portfolio. This can take some experience.
- The CushonMix portfolios are chosen by an algorithm based on key factors such as risk, performance and projected return. The ethical portfolio will include any of the funds under the ethical filter, with no extra priority given to those that are better in the sustainability stakes – so again, worth taking a deeper look.
- The charge for your pension varies according to the deal Cushon has with your employer – this could also be a plus, depending on your deal!
Cost of use
For ISAs, the charges you pay are made up of two parts: the Cushon platform charge of 0.4 per cent, plus a fund manager charge. The fund manager charges for the CushonMix ready-made portfolios are typically between 0.20 per cent and 0.30 per cent.
For the Net Zero Now pension, fund member charges are set by deals with employers and typically range from 0.29 per cent to 0.55 per cent of the pension pot. Cushon says that over the 12 months to January 11, 2021, its investment strategy delivered 10.42 per cent growth for its existing net zero fund.
How do these costs compare to competitors?
For ISAs, Clim8 Invest – which invests in publicly-listed companies that are actively tackling climate change – has an annual management fee of 0.6 per cent. You will also need to pay a portfolio fee, which ranges from 0.35 to 0.50 per cent.
The Big Exchange, which only includes funds that make a positive impact, has an annual platform charge of 0.25 per cent, alongside a fund manager fee (depending on who you go with) of between 0.8 per cent and 1.8 per cent.
When it comes to pensions, the average workplace pension charge is 0.48 per cent, according to the Department for Work and Pensions.
Risk warning: With investing, your capital is at risk. Past performance is not a reliable indicator of future performance.