Standard Life Forms Partnership to Boost Pension Risk Transfer Business
Standard Life has teamed up with Goldman Sachs, CVC Capital Partners, and Prudential Financial to improve its pension risk transfer business. The group plans to raise up to £2 billion over five years. Standard Life will contribute £500 million from its annual cash flow, while the rest will come from its partners. Standard Life will keep 51% of the voting rights in the new venture, called Standard Life PRT Solutions.
The partnership will focus on large UK defined benefit pension schemes. These schemes guarantee retirement payouts based on salary and service. This move comes as many corporate pension schemes are now in surplus, allowing companies to reduce their risk. Standard Life expects to gain from high-yielding global investments from its partners. This will help the company offer competitive pricing to pension trustees.
Andy Briggs, CEO of Standard Life, said, "By bringing together our comprehensive pension risk transfer capabilities with our partners’ specialist private markets capabilities and significant capital resources, we will be able to offer trustees and sponsors for the largest pension schemes an alternative to secure the pensions of their members across the UK." This partnership is part of a larger trend where UK insurers and private equity firms are focusing on the £1.3 trillion pension buyout market. Increased activity in this market is due to higher interest rates, which reduce plan liabilities.
Standard Life has already reduced £32 billion in pension liabilities over the past decade. The company aims to use this new partnership to become a leading retirement income provider in Britain. This venture is expected to support mid-single-digit percentage growth in operating cash generation and improve operating profits over time.
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The partnership is likely to strengthen Standard Life's position in the UK pension market. It may also affect related sectors like insurance and asset management. Investors will be looking for updates on the partnership's progress and its impact on Standard Life's financial performance.
Based on reporting by: cityam.com, proactiveinvestors.co.uk