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UK asset manager Abrdn has slashed employee benefits as part of a fresh round of cost cuts, halving redundancy payouts and reducing the length of paid parental leave by about a third.
The company has been battling to contain expenses and investor outflows as market turbulence and competition from passive fund houses has increased pressure on midsized asset managers. Abrdn reported a pre-tax loss of £169mn for the six months to June, and a £615mn loss for its previous financial year driven by investment performance.
The investment group will introduce a 52-week cap on redundancy payments from January next year, and from June these payouts will be dropped from four to two weeks per year of service.
Paid parental leave is being cut from 40 to 26 weeks with effect from next October, after employees lobbied to have the date pushed back from April. A policy allowing a phased return from parental leave on full pay over three months will also be axed from October.
One employee said the changes had hit morale, describing the moves as “yet another kick in the teeth for very weary staff”.
Abrdn said: “We continue to offer a leading employee proposition that compares well with other large employers in the sector and more widely. These updates to our approach mean that Abrdn is aligned both to market practice and our ambition to deliver a more efficient operating model.”
Abrdn chief executive Stephen Bird has embarked on a programme of cost cutting since taking the helm in September 2020 as part of a plan to revive the company’s languishing share price. He has closed, restructured or merged more than 100 funds, and earlier this year shed about a fifth of the group’s multi-asset team.
Shares in the company have lost 70 per cent since their peak in February 2015, and it has bounced in and out of the FTSE 100 over the past 18 months.
Abrdn was hit by larger-than-expected outflows in the first half of this year, with investors pulling £4.4bn from its funds on top of £10.3bn withdrawn in 2022. Less than half of the group’s assets under management beat their benchmarks on a one-year basis, although 58 per cent outperformed over three years.
Outflows were partially offset by inflows to Interactive Investor, the investment platform Abrdn acquired in 2021.
Mid-sized asset managers in the UK have struggled in recent years as investors have flocked to cheaper passive funds and the regulatory burden has increased, pushing up compliance costs.