Standard Life has inked a £2 billion deal to acquire Aegon’s UK business, with the combined group set to become the country’s largest retirement savings and income business with 16 million customers and £480 million in assets under administration.

The acquisition, which still has to pass regulatory review, will be funded through a combination of debt, cash and the issue of new shares in Standard Life, with Aegon becoming a new shareholder and partner with a 15.3% stake and a non-executive director seat on the board.

Standard Life said that the deal, expected to complete towards the end of the year, will deliver £800 million of long-term financial benefit, including £110 million in annual cost savings and around £340 million in one‑off capital release.

The acquisition is also expected to increase the enlarged group’s operating cash generation and operating profit by around £160 million, and unlock £400 million in additional cash over five years.

“With financial wellbeing at the heart of everything it does, Aegon UK’s values and culture are aligned with our own. Together, we will not only be stronger, we will be better – helping our customers achieve better outcomes and greater financial security in later life,” said Andy Briggs, group CEO of Standard Life.

The agreement will elevate Standard Life to become the UK’s second-largest workplace pensions platform by assets, adding £74 billion of assets under administration, with the firm taking advantage of Aegon’s platform to boost its tech and digital services.

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Under the deal, Aegon’s pension app Mylo will be integrated with Standard Life’s digital platform, with the new pensions giant building on Aegon UK’s AWS-enabled data capabilities to deliver hyper-personalised guidance.

“Standard Life is the right owner for Aegon UK: we share the same values and a strong commitment to customers, and together the businesses will create the UK’s largest retirement savings and income provider,” said Lard Friese, Aegon CEO.

“The businesses are complementary and the combination offers an excellent outcome for Aegon UK’s customers and colleagues. Aegon’s shareholding will provide an opportunity to participate in the future success of the enlarged group.”