Standard Life announces payment for benefit of Pension Sterling Fund customers

Standard Life is to make a payment for the benefit of around 97,000 customers who were invested in its Pension Sterling Fund when it fell in value by 4.8% on 14 January 2009.

We are restoring the value of the fund and this will put each customer back into the position they would have been in before this fall in value.

This will result in an additional approximate pre-tax charge of ?100m against profits in 2008.

This decision is a reflection of our belief that many people were not fully aware of the nature of the fund, and that some customers could not have anticipated that the value of their units could fall by such an amount in one day.

This action reflects the importance we attach to the long-term relationships we have with our customers.

Background: The Standard Life Pension Sterling Fund invests in bank and building society deposits and floating rate notes, the majority of which are asset backed securities, with an aim of providing greater returns than a fund invested purely in bank and building society deposits On 14 January 2009 Standard Life announced that the value of units in the fund had reduced by 4.8% to reflect a fall in the value of assets held within the fund.

Since this fall in value was announced Standard Life has carried out a review of the literature supporting the Pension Sterling Fund and listened carefully to feedback from customers and advisers.

What are we doing now? We have decided to put customers back in the position they would have been in before the fund's fall in value on 14 January 2009.

Having conducted our own review of the literature for the Pension Sterling Fund and listened carefully to what customers and advisers have been saying to us, it is clear that many people were not fully aware of the nature of the fund.

Furthermore, some customers would not have anticipated that units in the Pension Sterling Fund could fall by such an amount in one day.

With hindsight, some of the literature we provided in respect of this fund fell short of our own high standards.

Against this background, we feel strongly that the right thing to do is to put all customers back to the position they would have been in had we not reduced the value of the fund on 14 January If customers have switched to another Standard Life fund since 14 January, we will adjust the value of their investment to reflect this change.

Customers who have retired or transferred out after this date will receive a separate letter to explain how they will benefit from the action we have taken.

This does not in any way restrict customers' right to pursue a formal complaint should they wish to do so.

All complaints will be considered on a case by case basis and treated fairly.

We will write to all affected customers to inform them of our decision.

Pension Sterling Fund: We continue to believe the Pension Sterling Fund is a good investment choice for many of our customers.

Overall, the assets held within the fund are considered to be of high quality and, based on current expectations, to represent sound investments.

However, customers invested in the fund should be aware that its value can fluctuate and in some circumstances may fall.

Statement John Gill, managing director of customer service, said: "Standard Life would like to take this opportunity to apologise to any customers who have been affected by the fall in value of this fund.

In hindsight, some of the literature supporting the fund fell short of our own high standards, and it is important that we put this right.

"We have listened to our customers and advisers and believe that our response underlines our commitment to our long-term relationship with them.

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