Auto-enrolment pension provider Smart Pension has bought a “significant” stake in data transfer technology firm Pensionync.
Pensionsync, which was launched last year, builds middleware technology linking payroll and auto-enrolment pensions, a service already offered by Smart Pension.
Since its launch, Pensionlync has raised £2.6m in two equity rounds. Smart Pension did not disclose the size of its stake, but managing director Will Wynne told FTAdviser it was a “significant six figure sum”.
While Smart Pension has its own payroll interface competing with that of Pensionsync, Mr Wynne justified investing in Pensionsync by pointing to its team’s “deep knowledge” of payroll.
“While we’re investing heavily in our own direct payroll integration interface solutions and via our new adviser platform, we also think it’s important to identify and invest in key adjacent innovation, even if it’s not within our own company,” he said.
He said a specific requirement of the deal was that Smart Pension would have no control over Pensionsync’s business direction.
Pensionsync chief executive Will Lovegrove said Smart Pension’s investment would not change his company’s position as “provider-neutral”.
“But the closer working relationship between our two companies does mean we’re well positioned to collaborate on future data management challenges, such as the pension dashboard,” he said.
Henry Tapper, founder of auto-enrolment robo-advice website Pension Playpen, said middleware such as pensionsync, while necessary in the early days of auto-enrolment, has been largely superseded by technology developed by payroll companies themselves.
Speaking about middleware in general, rather than Pensionsync specifically, he said: “Middleware is an absolute disaster most of the time, because it replicates what payroll does, and typically requires payroll to do things twice: one, provide the data to middleware; and two, clean up the mess when it goes wrong.”
Mr Wynne argued that, done competently, middleware can make the “non-trivial task” of auto-enrolment data transfer easier for both payroll providers and pension funds.
Pensionsync’s clients include The People’s Pension, Aviva, Nest, Legal & General, and Now: Pensions, all of which compete with Smart Pension in the auto-enrolment space. The technology is produced by Systemsync Solutions.