Almost half of Prudential's staff in the UK will transfer to Capita

Under the terms of the 15-year contract, about 1,000 staff at the firm's Craigforth site near Stirling, and 750 in Reading will be affected.

Capita will now look after Prudential's mature life and pensions unit.

It comes six months after Prudential said 3,000 jobs were under review as it raised cost-cutting targets to �195m.

Prudential currently employs around 4,300 staff in the UK.

About 1,250 of Prudential's employees in Mumbai, India, will also transfer to Capita, the UK's biggest back office firm. Prudential has 1,800 employees in India.

The move is expected to generate savings of �60m per year by 2010, the company said.

Unite will be pressing for a commitment from Capita of no compulsory redundancies Graham Goddard, Unite deputy general secretary

Prudential has confirmed that all employees affected will be offered roles on their existing terms and conditions of employment.

The posts affected include those working in customer services, customer operations, information technology and other related support functions.

Prudential's union Unite called the outcome a "positive development" for staff.

"Unite will be pressing for a commitment from Capita of no compulsory redundancies," said Graham Goddard, Unite's deputy general secretary.

"We would envisage that redeployment opportunities and career prospects should be brighter in Capita, which is a growing business."

'Clear priorities'

With Capita looking after its individual pensions, and life and endowment policies, it frees Prudential to pursue growth opportunities in annuities, lifetime mortgages, protection and healthcare, the company said.

"We have set out very clear priorities for the business and this agreement helps us to deliver our strategy by removing fixed costs from our operations and achieving significant operating efficiencies," said Nick Prettejohn, chief executive, Prudential UK.

The restructuring process will cost the firm a one-off charge of �176m.