Updated: Resolution's £580m outsourcing deal is 'biggest ever' in pensions sector

A £580m 12-year outsourcing deal signed by pension fund manager Resolution with Capita is thought to be the biggest ever business process outsourcing deal in the sector.

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A £580m 12-year outsourcing deal signed by pension fund manager Resolution with Capita is thought to be the biggest ever business process outsourcing deal in the sector.

Resolution is the UK’s largest manager of in-force life funds, managing assets worth £61bn for around 7 million policyholders.

Its business process outsourcing (BPO) deal with Capita will see the contractor deliver IT services, customer services, policy servicing, claims and new business processing for approximately 4.5 million policyholders – plus future new business for Phoenix Life Assurance (formerly Abbey National Life), Scottish Mutual, Scottish Provident and Phoenix Life funds.

Ovum analyst Samad Masood said: “We reckon this is the largest UK life and pensions BPO contract to date. Under the deal Capita will take over 2,000 staff and responsibility for customer services, back office and IT, which includes improvements to legacy systems over a four-year period.”

Although Resolution plans to offshore a “substantial' amount of back-office work, Ovum understands that fewer than 500 onshore redundancies are expected over the next three years, with all customer-facing and “voice” to be retained in the UK.

Masood said Resolution was an experienced BPO client, which already had major contracts with Unisys, Liberata and Capita. He added: “It's worth pointing out that this latest deal does not effect Resolution's existing BPO contracts. And while the effect on Resolution's existing IT services deals is as yet unclear, we expect Capita will work closely with incumbents such as Atos Origin, one of Resolution's largest IT services providers.”

Capita would use its offshore resources “more aggressively than usual” to deliver the contract, he said.

Resolution is a consolidator of closed book pensions, and Masood noted that although Capita would not have exclusive rights to BPO work on new business acquired by Resolution, “the intention to partner on future deals is clearly there”.

“Indeed, Resolution told us that it will work with Capita in its future M&A due diligence to help identify synergies before an acquisition,” he said.

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