The life and pensions giant saw its share price slide to a low of 387.7p, down more 12p on the opening price, on reports UK workers will be offered Dutch-style collective pension schemes by 2016. However the stock later recovered to close down 1.68 per cent at 393.3p, making it the third biggest faller in the FTSE-100.
The prospect of further pension reform follows radical changes announced at the Budget in March to change the tax regime around defined contribution schemes.
The sweeping changes will mean policy holders will no longer have to buy annuities, and have the freedom to draw down as much of their pension pots as they wish.
Standard Life said sales of annuities fell 50 per cent in the weeks after the announcement, but played down the impact on profits.
The latest proposals being mooted would see workers offered the chance to join collective defined contribution (CDC) schemes. Supporters of these so-called mega funds, which would be shared with thousands of other workers, say they offer more efficiency to savers and are less volatile to variations in the stock market.
However investment company Hargreaves Lansdown said they are unfair as it would be difficult for actuaries to distribute money between generations, social groups and individuals. It also stated CDC members would be unable to enjoy the freedoms on pensions announced at the Budget.