Launched recently, Smart Pension aims to help small businesses deal with automatic pension enrolment.
I’ve been asking MD Will Wynne about the company and its plans. Will was also the man behind Arena Flowers, as well as being a guest contributor on this blog.
Please describe what the company does
It’s quite a technical field in the pensions sector, but it affects over 10m UK employees so is hugely important.
We are the UK’s fastest, most secure one-stop shop for workplace pension auto enrolment.
We allow companies to comply with their duties under the Pensions Act (2008) with 100% peace of mind and at absolutely no cost to their business.
NB: failure of employers to comply can result in fines of £500 a day or even a jail term of up to two years.
We have four explanatory videos that (succinctly!) explain the sector and us. https://www.autoenrolment.co.uk/knowledge-bank/videos
What problems does it solve?
In order to fix the problem of under-provision for retirement in the UK, the government legislated to require all UK businesses to:
- Automatically enrol all their qualifying employees into a workplace pension.
- To pay 1% of gross salary into the employees’ pensions (unless the employees opt out). (the government also tops up the contribution by 25% of the employees’ contributions.)
NB these contributions are all scheduled to rise over coming years.
Whilst there are providers in the marketplace already, they are nearly all built on slow, unscalable, paper-based business models and attached to businesses with absurdly high overheads, City overheads.
This model may have worked for the largest companies which auto enrolled first, given their thousands of employees.
However, as the process now approaches companies with fewer than 50 employees, the big providers are either exiting the market as they can’t make the economics work at such small employee numbers or charging hefty sums to SMEs to set up programmes for the companies.
At Smart Pension we have taken the best of UK tech (we have 8 API integrations and counting) and used all that’s great about the web and modern technology to completely rebuild the process from the ground up to turn what is an expensive weeks long process into something that can be done in one sitting and a few minutes, for free.
We’ve also done all the hard work to ensure the underlying financial product is as good as anything else out there, if not better, whilst employees’ funds are 100% ringfenced and protected by independent trustees.
Is this a crowded market?
It is but it’s not crowded with excellence.
What are your goals?
It’s early days. If we can help a few percent of the SME market get this done without all the pain and horror that is being talked up by all the advisors (who can then charge unwitting SMEs), we will be happy.
What are the biggest challenges you face?
Biggest is access to market. ie getting the message out. There are very powerful .gov.uk domains ranking well for all the key terms, and lots of advisor networks and adjacent businesses trying to take a slice of the pie.
We’re thinking hard about how to maximise the ROI of our our routes to market and make our do a great job of signing up SMEs.
How will you make money?
We don’t charge the employer anything for our standard service.
We charge employees 0.75% of assets under management (already in line with the fees cap that is due to come into force later this year).
To put this into context:
- The average UK salary is £26k.
- Of that, c £20k is subject to auto enrolment.
- Pension contributions are initially 2%. 2% of £20k = £400
- Average pot size from 0 to £400 over year = £200
- Our fee = 0.75% * £200 = £1.50 per employee.
With that £1.50 per head we have to cover: our independent trustees, our investment manager’s costs, our pensions administrator’s costs, as well as all of our own costs and overheads (tech, CS, marketing) and the rest.
You can probably see why the banks and insurance companies prefer to cover all their costs up front with a hefty fee.
Who is in your team?
We have a very experienced team, split roughly between finance and marketing / tech.
I’m in charge of the marketing / tech piece and my experience of 8 years founding and running ArenaFlowers.com has obviously stood me in good stead.
Where would you like to be in one, three and five years’ time?
In a year’s time, we would like to be one of the top providers, if not the obvious go to option for SMEs.
In three years’ time, the auto enrolment process will be closing and we’ll be hopefully set up with a significant group of SMEs on board and looking to how we can further help them in the future.
In five years’ time, we would hope to be offering additional services to our installed base to help them with their ongoing financial journey, be they the employer or employee.
Other than your own, what are your favourite websites / apps / tools?
I’m a massive Google fan…I’ve nearly stopped using Excel, which as an ex investment banker, I never thought would happen.
The sharing options of Drive files are often more of a benefit than the power options in Excel.
I’m also a big user of the other Google services, be it AdWords, GMail, Analytics, Android, Chrome and the rest.
Our flower and gifts delivery business is the best in the UK (if I do say so myself): Arena Flowers and AmazeBox.
Plus other things I’ve loved recently: Dropbox obviously (well, not that recently), Citymapper is awesome and Viber rules over other messaging apps. And my mother is getting a Tesla delivered in March and I can’t wait for a go in that! Musk is a terrifyingly kickass badass. Love it.