Standard Life is set to launch a new pension risk transfer (PRT) partnership backed by up to £2bn of initial capital, with the goal of expanding its reach into the largest and most complex defined benefit (DB) pension schemes.

The partnership, which remains subject to regulatory approval, brings together Standard Life with CVC Capital Partners, Prudential Financial Inc. (PFI), Goldman Sachs, MS&AD and other long-term institutional investors.

The combined initial capital commitment of up to £2bn is expected to be drawn over five years, including £500m from Standard Life, with the balance provided by the consortium led by CVC and PFI.

Standard Life said the partnership would allow it to support a broader range of DB schemes, particularly at the upper end of the market, where it expects a significant and growing share of future de-risking activity.

The firm cited estimates that between £350bn and £550bn of UK DB scheme assets could be de-risked over the next decade.

The partnership will operate under the name Standard Life PRT Solutions and will be delivered through Standard Life’s existing regulated insurance platform.

Standard Life will retain full operational control, while CVC, PGIM, PFI’s asset management business, and Goldman Sachs Alternatives will provide access to private markets asset origination.

The firm argued this would improve pricing competitiveness and structuring flexibility for large and complex transactions, while also giving the partnership access to long-term capital aligned with the long-dated nature of DB liabilities.

Standard Life group CEO, Andy Briggs, said: “We are delighted to announce the expansion of our PRT business in partnership with a group of internationally recognised financial institutions, who are committing global capital into the UK PRT market.

“By bringing together our comprehensive PRT capabilities with our partners' specialist private markets capabilities and significant capital resources, coupled with a trusted and well-known brand in Standard Life, we will be able to offer trustees and sponsors for the largest pension schemes an alternative to secure the pensions of their members across the UK.”

Briggs added that the deal would further accelerate Standard Life’s ambition to become the UK’s leading retirement savings and income business.

Standard Life PRT Solutions CEO and Standard Life interim CEO of retirement solutions and asset management, Nuwan Goonetilleke, noted that the structure had been designed to support complex de-risking while maintaining member outcomes and operational control.

“Our consortium approach enhances our ability to deliver competitive pricing and innovative structuring for trustees, whilst maintaining Standard Life's independence and control,” Goonetilleke added.

The partnership will also create a new source of fee-based revenue for Standard Life, which will receive payments from the consortium for oversight, operational services and origination of PRT transactions.

The firm expects to fund its £500m commitment through annual excess cash generation over five years and anticipates that the partnership will support mid-single-digit annual growth in operating cash generation over time.

The near-term impact on its shareholder capital coverage ratio and Solvency II debt leverage ratio is expected to be minor.

Standard Life stressed that there would be no change to how existing buy-in customers interact with the firm and that current service, governance and security arrangements would remain in place.

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