Standard Life Aberdeen has announced the sale of its workplace pensions business to Phoenix Group just days after the collapse of a proposed merger with Scottish Widows had been announced.
Standard Life, which had in recent years been the largest workplace pensions provider in the UK, will continue to market and distribute the workplace pensions, which will retain the Standard brand name, on a white-label basis, while the back office administration and ownership of the schemes will transfer to Phoenix.
A Standard Life Aberdeen source says it is too early to say whether there will be any job losses.
The transfer to closed-book specialist Phoenix has been priced at £3.42bn, and also includes the UK mature retail and spread/risk books as well as the Europe and UK retail businesses.
A statement from Standard Aberdeen says the deal presents the ‘opportunity for wider collaboration as the asset manager of choice for Phoenix Group’, in which it holds a 19.99 per cent stake.
Phoenix has committed to maintain operational headquarters in Edinburgh.
The announcement has come within the company’s annual results. The company reported a profit of £854m, compared to £718m the previous year. The provider’s results statement highlighted the importance of its life and savings business as a source of assets for Aberdeen Standard Investments, which distributed 84 per cent of total MyFolio AUM. Aberdeen Standard Investments currently manage 71 per cent of the provider’s workplace AUA and 17 per cent of its wrap assets. The life and pensions business brought in net inflows of £4bn last year, compared to £1.5bn in 2016.
UK workplace AUA increased by 7 per cent to £40.2bn, up from £37.4bn in 2016, with net inflows of £1.4bn. The provider says that auto enrolment caused. regular premiums to increase by 5 per cent to £3.2bn, accounting for 76 per cent of total workplace inflows. The provider says its workplace business continues to be a source of growth for its channels, with £2.2bn of workplace AUA transferred to retail when customers left their company pension schemes in 2017.
Standard Life Aberdeen chairman Sir Gerry Grimstone says: “This transaction completes our transformation to a capital light investment business, a process started in 2010 with the sale of Standard Life Bank, continuing with the sale of our Canadian business and the merger last year between Standard Life and Aberdeen Asset Management. This transaction represents excellent value for our shareholders, including a comprehensive and mutually beneficial strategic relationship entered into with Phoenix Group, a longstanding partner of the firm. In addition, I am particularly pleased to note Phoenix Group’s commitment to maintain operational headquarters in Edinburgh.”