Workplace pensions boost for Standard Life

Chief executive David Nish sees greater opportunities from April, when new pension rules come into force. Picture: Contributed

Rules forcing employers to provide pension plans for their staff saw the group win 173,000 “auto-enrolment” savers in the first six months of the year, helping to drive profits up 12 per cent, in line with City hopes.

The Edinburgh-based firm also reiterated its warning that a Yes vote in next month’s independence referendum would create a number of “material issues” for the insurer.

Chief executive David Nish told The Scotsman that the life and pensions firm, which employs about 5,000 north of the Border, was “focused on looking after the competitiveness of our business and our customers” and continued to work on contingency plans that could see it relocate parts of the business to England if voters opt in favour of independence.

In its annual report, published earlier this year, Standard Life said it was concerned over the uncertainty surrounding what currency a separate Scotland would use and whether it would remain a member of the European Union.

It also highlighted the landscape for financial services regulation and individual taxation – particularly around savings and pensions – and said it was unclear how any changes might affect its four million UK customers.

The firm said yesterday: “We do not believe that further clarity has been provided on any of these issues since our 2013 annual report and accounts was published on 27 February.” The comments came as it reported an underlying pre-tax profit of £339 million for the first half of 2014, up 12 per cent on a year earlier, as assets under administration grew 4 per cent to £254.1 billion.

Shareholders are in line for an interim dividend of 5.6p a share, an increase of 7.3 per cent on last time.

The group’s fund management arm, Standard Life Investments, recently completed its £390m acquisition of rival Ignis Asset Management, and while Nish said the integration was “going well” he was unable to give any details about how the deal might affect the firm’s 230 workers in Glasgow.

Although the group has benefited from the introduction of auto-enrolment, with more than 1,000 schemes set up in the first half, further upheaval in the pensions industry has knocked sales of its annuity products, which slumped by half in the immediate aftermath of Chancellor George Osborne’s surprise Budget reforms.

Nish said: “I think we’ll see that the second half will be down quite significantly.

“The new rules for bigger pots of money don’t come into place until April, so next year is when we expect to see a greater opportunity for us to begin retaining more business and challenging others for their business.”

He said the business was “reshaping away from annuities towards drawdown”, which lets people leave their pension savings invested in the market.

The group is also awaiting the final details of changes to foreign investment limits in India, where it has a  26 per cent stake in life insurance business HDFC Life. The new government is planning to implement rules allowing foreign investors to own up to 49 per cent of local companies, and Nish said: “I certainly look positively upon an opportunity to increase our stake in HDFC Life.”