Scottish Widows 

Scottish Widows deal with Zurich shows pensions commitment

Scottish Widows deal with Zurich shows pensions commitment

The pensions arm of Lloyds Banking Group will have greater efficiency after the acquisition of Zurich’s UK workplace pensions and savings business.

According to a Scottish Widows spokeswoman, the deal will also result in a “a better communications approach for customers”.

However, it is “too early to comment on proposition development cost synergies,” she said.

Lloyds announced today (12 October) that it will buy Zurich’s UK workplace pension arm, along with assets under administration of more than £15bn and 500,000 customers.

According to Lloyds, the transaction enhances Scottish Widows’ offering while delivering a modern, flexible workplace savings platform and an enriched customer experience.

Scottish Widows already manages more than £124bn of funds, of which £35bn is workplace pensions business.

The overlap between the two businesses by customer, market or product is minimal, the spokeswoman said.

“The two propositions greatly enhance each other,” she added.

The deal will have no impact on financial advisers, she said, as Scottish Widows does not intend to disturb existing relationships for the two companies’ respective schemes.

She said: “There will be some duplication of contacts for employee business consultants within the distribution network, and we intend to review this between now and the end of the first quarter of 2018.”

According to Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, today’s announcement “is a good sign”, showing that “Scottish Widows are here for the long term, which will give confidence to many advisers who use them”.

He said: “I don’t see there being much of an impact to advisers as I suspect the terms of any existing Zurich pension schemes will remain largely the same.

"Scottish Widows is much better equipped in today’s pensions market. They have a solid offering in the individual and workplace pensions space.”

For Laith Khalaf, senior analyst at Hargreaves Lansdown, the deal underlines Lloyds’ commitment to the pensions market, “scotching rumours that have circulated for years that the bank is looking to sell off the Scottish Widows franchise.”

He said: “This part of the business adds some diversification to the Lloyds stable without the risks inherent in the investment banking activities practiced by its peers.

“By comparison the workplace pensions business is sleepy, steady and sticky.

"The defined contribution market is also growing, thanks to the government’s automatic enrolment programme, which is forcing employers and employees to pay money into workplace pensions.”

The acquisition is expected to partially close in the first quarter of 2018, with subsequent completion and transfer of assets following the required regulatory and legal approvals.

maria.espadinha@ft.com

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