STANDARD Life, the Edinburgh-based insurance giant, has confirmed plans to cut 139 jobs as it restructures its UK business in preparation for radical reforms in the pensions industry.
The group said it needed to introduce “more streamlined and flexible organisational structures” to meet the twin challenges of the retail distribution review (RDR), which will ban commission payments to financial advisers from next year, and new rules forcing employers to provide pensions for all eligible members of staff.
It emerged last month that sales of Standard Life’s corporate pensions tumbled 38 per cent to £635 million during the third quarter as companies put their plans on hold ahead of the “auto-enrolment” shake-up, but the group insisted it was well-placed to benefit from the changing regulatory landscape.
Auto-enrolment is expected to see around 400,000 extra savers join the 35,000 corporate pension schemes run by the firm, but it believes there is an even bigger opportunity to be had from securing new scheme mandates.
A spokeswoman for the insurer told The Scotsman that the bulk of the job cuts will be made in Edinburgh, while a small number of jobs could be lost at its offices in London. There will be “a small proportion” of compulsory redundancies, totalling around 16, mainly in senior positions.
Standard Life employs 9,000 people, of whom about 5,500 are based in Edinburgh. Staff were told about the plans during a series of briefings yesterday.
The firm said it was cutting staff in IT and marketing, along with areas dealing directly with advisers, customers and employers, to create a “flexible operating model to ensure continued success in the years ahead”.
Paul Matthews, chief executive of UK and Europe, said: “Great progress has been made getting Standard Life ready for the RDR and pensions reform. These initiatives significantly change the way customers engage with us.
“Our current model and structure has to change to meet the changing demands of this new world where customers will want to interact in different ways for different products. The changes being proposed today fundamentally change how we’re organised.”
The RDR has been described as the biggest shake-up to the way financial products are sold. New rules coming into force next year mean customers will have to pay for advice up-front, rather than advisers being paid by commission from product providers.
Analysts have consistently cited Standard Life as being one of the insurers that is best prepared for the implementation of the RDR, because it stopped paying commission when it floated in 2006.
A spokeswoman said: “Getting the company to this point was the first step; actually operating in a post-RDR world is the next one. We’ve always said we’ll grow the business in certain areas, but there will be other areas where we might not need as many people.
“The 139 job losses announced is only part of the story – in some cases, teams are being moved from one area to another because they need more resources. There’s a lot of change and evolution going on, and sometimes that impacts on headcount, so as we move into an RDR and auto-enrolment world, we’ll need different skillsets.”