Miranda Seath, Head of Intermediary Research, comments:
A merger between Scottish Widows and Standard Life would create a combined group with assets under management in DC schemes north of £70.6 billion – making it the largest defined contribution player by assets.
Both pension providers target similar profiles of employers with similar contribution levels (See second chart): medium to large employers with above average contribution levels. This potential acquisition seems likely to be investment led – after Aberdeen’s acquisition of the SWIP book there will be substantial investment management synergies and close ties remain through Lloyds Banking Group’s 10% stake in Aberdeen.
Scottish Widows has largely shaken off its auto-enrolment woes and by the end of 2017, Lloyds Banking Group will have spent £70 million on upgrading Scottish Widows’ digital proposition. This would be of benefit to Standard Life if it plans to keep the proposition and front-end technology separate following a merger, which seems likely given its strategy for the Elevate and Standard Life Wrap platforms.
Total workplace DC assets for providers with 100,000-plus scheme members as at Q3 2016
| Provider | Total DC AUM Sep 16 |
| Standard Life-Scottish Widows (combined) | £70.6bn |
| Legal & General | £56.9bn |
| Aviva Friends Life | £55.0bn |
| Fidelity | £27.5bn |
| Aegon | £18.5bn |
| Zurich | £18.1bn |
| BlackRock | £12,7bn |
| Royal London | £6.9bn |
| Hargreaves Lansdown | £2.2bn* |
| The People’s Pension | £1.5bn |
| NEST | £1.2bn |
| NOW: Pensions | £294.0m |
| Total | £271.2bn |
Source: Platforum, February 2017
Provider targeting based on employer size and average contributions
Source: Platforum, February 2017