Insurance group Standard Life to axe 600 jobs in major overhaul

Insurance and pensions group Standard Life is to cut 600 jobs over the next 15 months as part of a major overhaul of the business. The Edinburgh-based insurer's new chief executive David Nish, who took over from Sir Sandy Crombie in January, is wielding the axe to streamline operations and shift the group's focus to long-term savings products such as individual and company pensions, rather than life insurance and investment bonds. Standard Life said 480 jobs would go in Edinburgh and 95 at its regional offices across Britain, with another 25 lost in its overseas operations. Of the jobs being cut, about 100 are held by contractors, another 100 of the reductions are expected to be achieved through natural attrition, and 24 are vacancies that will not be filled. Scottish secretary Michael Moore said: "The news of jobs losses at Standard Life is a real cause for concern." He urged the firm to "do all it can to minimise the numbers of staff affected" and said he would be meeting Nish shortly to discuss his concerns with him. Moore added: "Financial services will continue to play a key role in Scotland's economy and I will continue to do all I can at British government level to support and grow the number of jobs the sector brings to Scotland." At the same time, Standard Life is creating 100 new jobs elsewhere in the business as part of a £200m investment drive in core areas, flagged earlier this year. The company, which employs about 7,500 of its 10,000 staff in the UK, including 6,000 in Scotland, said the job reductions would be across the board, affecting IT, finance, risk, marketing and communications – "from director level right down to the most junior members of staff". It is the second phase of a major shake-up, which saw 11 directors leave at the end of June, while 12 new roles were created, including the appointment of Mark Dixon as chief technology officer. The insurer also merged its sales, marketing and distribution units in Britain, Europe, Canada and Asia. "As we transform Standard Life to deliver its growth ambitions, there is a need to both invest for future growth and actively manage our costs to be competitive," said Nish. "The decision is part of the journey towards being a more adaptable and flexible organisation. Our people will be provided with the support they need while the group goes through this necessary change." The changes are beginning to pay off, with the company enjoying a 10% rise in first-half operating profit to £182m last month and raising its interim dividend by 4.8%. It now manages pension scheme assets of £18bn after winning 90 new company retirement schemes. Nish is focusing on selling individual self-invested personal pensions as well as running corporate schemes, ahead of the introduction of compulsory workplace pensions from 2012. He sees Britain as crucial to Standard Life's business strategy, although he has also pointed to India and China as regions with lucrative growth opportunities. By contrast, rival Aviva is chasing business in continental Europe and in Britain, while Prudential remains focused on Asia, even though its attempt to buy AIA failed. The job cuts will help Standard Life achieve its cost savings target of £100m by the end of 2011. A spokeswoman added: "Standard Life is going through a transformation. We are flattening a lot of hierarchies and making sure there is no duplication of roles. We need to manage the cost base and ensure the right skills are in the right position to take the business forward." The company stressed it was trying to keep compulsory redundancies to a minimum. It is now entering a 90-day consultation with its staff association. In March, Standard Life set out its new strategy, focused on its core businesses of corporate, retail, investment management and Asian joint ventures.