Savings boost lifts profits at Standard Life

By LIFE assurance and pensions group Standard Life has seen a leap in profits to £425m, driven by appetite for long-term savings.

Investors boosted the Edinburgh-based firm, with long-term savings net flows up 77 per cent to £4.7bn.

Assets under administration at the group stood at £196.8bn.

Changes to the way pensions are linked to inflation also lifted the firm, contributing to a £59m saving.

The windfall comes after the government allowed some pension schemes to link to the Consumer Prices Index, rather than the typically higher Retail Price Index.

Shares in the group fell, closing 7.3 per cent lower, despite the strong looking performance.

Analysts pointed to an unexpected £200m investment in the firm’s IT business and a meagre increase in dividend payment for the fall.

The firm had already ploughed £200m into its IT infrastructure a year earlier, with tangible benefits not expected until at least 2012. It said yesterday it would pay a dividend of 13p for this year, up from 12.4p a year earlier. The performance of its global investment business increased “significantly” to £100m – a 40 per cent increase.

Panmure Gordon analyst Barrie Cornes said: “Investing in the business is probably the right thing to do but the returns will only start flowing in a few years time. The market tends to look a bit closer than that in terms of positive news.”