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Scottish Widows mulls Standard Life corporate pensions book takeover

Lloyds Banking Group is believed to be in advanced talks to buy the Standard Life corporate pensions book and roll it into Scottish Widows.

The deal, following on yesterday’s announcement that Lloyds is buying the Zurich corporate pensions book, would make Scottish Widows the largest corporate pensions provider in the UK by a considerable margin.

Speculation emerged in June that Standard Life could be buying Scottish Widows. But Money Marketing sister title Corporate Adviser has been told by several different sources that a deal where Widows is the buyer not the seller is currently being worked out. One source says discussions are advanced and described the chances of the deal happening as 80 per cent.

Yesterday’s announcement that LBG is buying Zurich’s corporate pensions book will make Scottish Widows the third largest UK provider.

Based on Q3 2016 AUA figures, published in Platforum’s February Workplace Savings Guide, Scottish Widows’ acquisition of Zurich would give it a combined £47.7bn AUA, compared to L&G at £56.9bn and Aviva at £55.0bn. Adding in the Standard Life Aberdeen book would take it to around £85bn, considerably bigger than its rivals. The deal would also further Standard Life Aberdeen’s aim of focusing on asset management.

A source suggested that September’s first bulk transfers of group DC schemes through Origo, where schemes passed between Standard Life and Scottish Widows automatically, may have been a test run for future consolidation of assets.

Aberdeen bought Scottish Widows Investment Partnership in 2014, since when it has run significant assets for the provider. Lloyds has pledged to give 12 months notice of any intention to withdraw funds from Aberdeen.

Lloyds agreed not to progress further deal talks until six months after the Standard/Aberdeen merger completed. That merge completed in August, meaning no official announcement might happen until February 2018.

A Standard Life Aberdeen spokesperson says: “Anything beyond what is in our prospectus is speculative. In terms of our pension and savings business more broadly – it has built a strong position in both the UK platform and workplace pension markets.  Our commitment to this market has been demonstrated in a number of ways recently through the acquisition of the Elevate platform, the continued expansion, through acquisition of our national advice arm – 1825 – and reaching over 1 million employees auto-enrolled since 2012.”

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