Great-West Lifeco to slash 1,500 jobs amid digital growth

WINNIPEG — Great-West Lifeco will cut 1,500 positions over the next two years in response to changing technology and customer expectations, the financial services company said Tuesday.

The cuts — which will be mostly back-office functions across the organization — are equal to 13 per cent of the Winnipeg-based company’s 12,000 employees in Canada.

“Not only are customers demanding greater digital and mobile access to financial services, they are becoming increasingly cost-sensitive,” Great-West president and CEO Paul Mahon told analysts on a conference call.

The company expects to lower its annual costs by $200 million, before taxes, by the end of March 2019.

About two-thirds of the savings will be from the workforce reduction, and the rest primarily from reduced IT spending with some real estate savings.

About 1,000 of the job cuts will happen this year with the remaining 500 positions to be eliminated more gradually throughout 2018 and early 2019.

At the same time, the company will continue to hire people who have the required skills.

About 450 positions will be cut in Winnipeg, where Great West Life is among the city’s major private-sector employers.

“Seeing any layoffs occur with any company is always a setback,” Manitoba Premier Brian Pallister said. “I know that it’s not an easy thing to do in the short term — for anyone — to experience job loss, but it is important to understand that this is a company that has been employing tens of thousands of Manitobans for a long time and that it’s making decisions it feels are necessary to compete.”

Among other things, GreatWest has updated its GroupNet online portal for health claim submissions and created an app for customers to track retirement savings across financial institutions.

Great-West is also a coinvestor in Portage Investments — which includes the WealthSimple robo-adviser business in its portfolio of financial technology companies.

But Mahon said there’s no plan to reduce its commitment to distributing products through various channels, including its network of associated advisers.

To reach its targets, GreatWest said it will reduce its temporary workforce, offer a voluntary retirement program and a severance program.

The initiative will reduce Great-West’s earnings in this year’s second quarter by $127 million after taxes, or 13 cents per share.