UK- South African financial services group Alexander Forbes and its consultant subsidiary Lane Clark & Peacock have announced they are to buy the Schroder Pensions Group, which administers defined contribution schemes, for £22.5m.

The pair claim the deal will strengthen their ability to supply the DC market and that it will create the opportunity to provide specialist investment products to both DC and DB pension plans.

On completion of the transaction, Alexander Forbes will own 75% of the business and Lane Clark Peacock the rest. In purchasing the entire share capital of Schroder Pensions, the pair will also take on the wholly-owned subsidiary Schroder Pensions Services.

Investment Solutions, a subsidiary of Alexander Forbes and South Africa-based multi manager, will provide specialist support in the areas on investment product design and administration.

Rael Gordon, deputy chief executive of Alexander Forbes said of the deal: “it gives us a platform to enter the specialist investment product market in the UK by combining Investment Solutions’ experience gained in the South African market with LCP’s actuarial skills and research.

‘In conjunction with LCP’s existing pensions administration business, the group can now provide pensions administration services across the full range of pension scheme arrangements.”

The decision by Schroders to sell the pensions group comes after chief executive Michael Dobson announced the disposal of its non-core businesses after a pre-tax loss in 2001 of £8.1m.

Schroders has decided to sell its passive management business to Hermes Pension Management and has already cut back its private client operations and outsourced the administrative arm of its mutual fund business.