L&G To Take Stake In Smart Pension Provider

Legal & General (LSE: LGEN.L - news) (L&G) is in talks to buy a stake in one of Britain’s fastest-growing providers of auto-enrolment pensions as it seeks to tap into the explosive growth of emerging digital platforms for financial products.

Sky News understands that L&G is in advanced discussions with Smart Pension, a platform aimed at helping thousands of smaller companies comply with new British laws requiring them to offer workplace pensions to employees.

Co-founded in 2014 by a former head of Lloyds Banking Group (Other OTC: LLOBF - news) 's wealth unit and a technology entrepreneur, Smart Pension launched last year in anticipation of huge demand from companies ahead of a final Government deadline for auto-enrolment in 2018.

Thousands of warning letter have already been issued by the Pensions Regulator to small businesses which have failed to establish the new arrangements on time.

The new measures have sparked huge concerns among groups representing SMEs because of the bureaucratic obligations it presents.

It (Other OTC: ITGL - news) means that every employer must automatically enrol workers into a workplace pension scheme if they are aged a least 22, earn more than £10,000 and work in the UK.

Smart Pension's service is free to employers, while it charges individual employees a fee worth 0.75pc of their pension contributions, compared to the 3.9pc charged by the Government-backed pensions service Nest.

The start-up raised just over £3m last month from a series of angel investors including William Reeve, an entrepreneur who has backed companies including LoveFilm and Graze.com.

The company says its technology platform means that auto-enrolment is "affordable, accessible and sustainable for thousands of small business founders and their advisers".

Alongside its latest fundraising, Smart Pension named Sir Anthony Joliffe, a former Lord Mayor of London, as its chairman.

The size of L&G's likely investment in Smart Pension was unclear on Tuesday, and a source close to the discussions said that a deal had not yet been finalised.

The FTSE-100 pension provider declined to comment, while Smart Pension could not be reached.