Pensions  

L&G buys stake in auto-enrolment startup

L&G buys stake in auto-enrolment startup

Legal & General Investment Management has bought a stake in Smart Pension, a startup specialising in providing auto-enrolment pensions to small businesses.

The exact size of the investment was not disclosed, but it was understood to be a minority stake of more than the £3.3m raised in Smart Pension’s recent round of capital raising.

Prior to the deal, Smart Pension already exclusively used LGIM funds.

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A spokesperson confirmed the deal would shore up this exclusive arrangement, while offering members of the AE scheme a wider range of LGIM funds.

The deal will also see Emma Douglas, head of LGIM’s defined contribution pensions business, taking a non-executive seat on the Smart Pension board.

Mark Zinkula, chief executive of LGIM, cited Smart Pension’s “powerful digital platform”as the key factor in the decision to invest.

He said: “Achieving excellence in technology continues to underpin our overall strategy. To be successful in this digital age, we know how important it is to embrace and invest in innovative technology solutions that offer substantial benefits to our customers.”

Smart Pension chief executive Andrew Evans said the market had responded “very positively” to the scheme.

“We have already signed up thousands of employers and advisers and are now enabling tens of thousands of employees to save into a pension for the first time. Smart Pension ensures that auto enrolment can be a success for all workers in Britain,” he said.

While the deal essentially makes Smart Pension a distributor for LGIM funds, a spokesperson for Smart Pension told FTAdviser that Smart Pension would “definitely not” be merging with LGIM.

In May, Smart Pension itself took a substantial stake in Pensionsync, a fintech firm that builds middleware technology linking payroll and auto-enrolment schemes.

Christopher Daems, director of Cervello Financial Planning and a specialist in advising businesses on auto-enrolment, said:

“Technology is undeniably important when it comes to making sure automatic enrolment works and Smart Pension have made significant investments in this element of their business, which is why the investment from LGIM is understandable.

“With the huge number of employers who still need to comply investment into solutions which work should be encouraged, as long as the solutions which are being invested in remain sustainable and continue to support the market over the longer term.”

james.fernyhough@ft.com