Prudential UK has signed a 15-year outsourcing contract worth £722m with Capita that it expects to deliver annual savings of £60m by 2010.
The monster deal will see insurance giant the Pru hand over the administration of 7 million mature life and pensions policies, including group and individual pensions, investment bonds bonds and life and endowment policies.
Under the contract, Capita will provide customer servicing, policy administration, new business processing, claims activity and related IT support to Prudential UK.
The deal remains subject to a collective consultation process, but the plan is for approximately 1,750 Prudential staff working in the UK 1,000 in Craigforth and 750 in Reading – to transfer to Capita under the TUPE regulations in April next year.
A key element of the deal is Capita’s acquisition of business and assets from Prudential for £25m, including part of the business of PPMS, Prudential's offshore operation based in Mumbai, involving the transfer of 1,250 staff. Although TUPE does not apply in India, all affected employees ill transfer “in the spirit of the legislation,” according to both sides.
A further £100m of the deal is an investment by Prudential UK, over six years, to fund a transformation programme. The programme aims to deliver enhanced customer service through a substantial simplification of policy administration processes and migration of in-force and new business policies from Prudential's legacy IT systems to two Capita platforms.