The Just Retirement board said it expected the merger to result in pre-tax cost savings of at least £40 million per year, with the full run-rate being achieved in 2018.

One-off integration costs of £60 million over two years have been forecast.

The statement suggested there would be job losses.

The boards said they “anticipate that this will involve headcount reduction” and have begun “integration planning” but full details are yet to be finalised.

The merger is expected to result in Just Retirement Shareholders owning approximately 60 per cent of the combined group and Partnership shareholders owning approximately 40 per cent. The deal values Partnership at about £668.5 million.

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The companies expect the deal to accelerate new product launches.

The companies said: “This is of critical importance given the greater expectation of new products among customers following the freedom and choice introduced by the 2014 pension reforms.”

Rodney Cook will be group chief executive, while David Richardson will be deputy group chief executive officer and Simon Thomas the group finance director.

Chris Gibson-Smith will be the chairman of the combined group while Tom Cross Brown will assume the role of deputy chairman.

Tom Cross Brown, chairman of Just Retirement, said: "This transaction represents a unique opportunity to accelerate the existing strategy of both businesses. Our two businesses will be bigger, stronger and more efficient together, which we believe will allow us to deliver better returns to both policyholders and shareholders."

A statement from the companies read: “The boards believe that the merger will deliver significant strategic and financial benefits for the combined group.

“The larger capital base will enable a broader defined benefit proposition and enhance the group's perceived strength of covenant, opening up opportunities in the attractive defined benefit scheme de-risking segment.

“The merger will strengthen the competitive position of the combined group in the UK retirement income market, expected to lead to improved customer outcomes compared to the products currently offered by larger incumbent insurers.

“In both the UK defined benefit de-risking segment and retirement income market, the streamlining of sales functions will lead to a more efficient distribution model for the combined group. Overseas expansion will be facilitated through combined international expertise.”

Chris Gibson-Smith, chairman of Partnership, said: "Both businesses have at their core a focus on using outstanding intellectual property and underwriting expertise to deliver better value products and improved customer outcomes within defined benefit, UK retail retirement income and international markets."