Standard Life PLC (LSE:SL.) has formed a strategic partnership with a consortium of global financial institutions to expand its pension risk transfer business.
The venture, named Standard Life PRT Solutions, will be funded by an initial capital commitment of up to £2 billion expected to be drawn over five years.
Standard Life will commit £500 million from yearly excess cash generation, while the balance of up to £1.5 billion will be provided by consortium partners.
Private equity firm CVC Capital (EURONEXT:CVC) Partners and US insurer Prudential Financial Inc (NYSE:PRU) will lead the consortium alongside investment bank Goldman Sachs Group Inc (NYSE:GS, XETRA:GOS) and Japanese insurance group MS&AD Insurance Group Holdings.
Pension risk transfers allow companies to move defined benefit pension scheme liabilities, where retirement payouts are guaranteed based on salary and service, off their corporate balance sheets.
The partnership targets large UK defined benefit schemes, expected to drive a significant share of the £350 billion to £550 billion in de-risking transactions projected over the next decade.
Standard Life will retain full operational control of the partnership, maintaining the same customer proposition, governance, and service model while leveraging private credit and asset origination from consortium partners.
The company expects total returns from the venture to support yearly mid-single-digit % operating cash generation growth and bolster operating profit over time.
The deal follows Standard Life de-risking £32 billion in pension liabilities over the ten years to December 2025, including a £1.9 billion transaction for the Sedgwick Section of the MMC UK Pension Fund.
Alongside its recently announced acquisition of Aegon UK, the group said the partnership accelerates its ambition to become the leading retirement income business in Britain.
