Standard Life partners with Goldman Sachs and CVC to fuel pension risk transfer business

Standard Life has formed a partnership with CVC and Goldman Sachs to expand its presence in the rapidly growing pension risk transfer market. The FTSE 100 group has joined forces with a consortium led by CVC, which also includes insurer Prudential. This collaboration aims to allocate as much as £2bn over the next five years, with Standard Life contributing £500m, which it expects to generate from its annual surplus.

The insurer will control 51% of the voting rights in the partnership. Pension risk transfers involve moving the financial responsibility of a defined benefit pension plan to a third party, usually an insurer. The deal will provide Standard Life with significant cash reserves to take on large corporate pension deals and secure better returns for pension trustees.

Andy Briggs, CEO of Standard Life, stated that the partnership will enable the company to offer trustees and sponsors of the largest pension schemes an alternative solution for safeguarding their members' pensions in the UK. This move is part of a string of recent tie-ups between UK insurers and private capital firms in the £1.3 trillion pension buyout sector, which has surged due to lower interest rates and increased affordability of plan purchases.

However, the surge in interest has also raised concerns among regulators, with the Bank of England starting to tighten regulations on funded reinsurance, a tool used by firms like L&G and Standard Life to transfer pension risks to offshore reinsurers.