The appointment of Mr Savage, currently head of finance for the Lloyd's of London insurance market, ends a long quest for a new CFO by Standard Life. The search started following the surprise departure of Jackie Hunt in April last year.
Ms Hunt quit the Edinburgh-based life and pensions giant to become the first female chief executive of arch-rival Prudential's UK and Europe arm, with an annual package of up to £3m.
Standard Life's chief executive, David Nish, said Mr Savage would bring exceptional experience of the insurance and investment markets at a time when the company sees significant growth opportunities.
The company underlined its ambitions in March by acquiring Glasgow-based Ignis Asset Management for £390m.
"Luke's proven track record as a highly commercial Chief Financial Officer will support the delivery of our strategy," said Mr Nish.
Standard Life noted that in 10 years as a director of finance and operations at Lloyds of London, Mr Savage had led programmes of significant change, including implementing the EU Solvency 2 programme for insurance businesses.
Before joining Lloyds of London, Mr Savage spent four years at Deutsche Bank as Global CFO for the group's equities business and ten years with Morgan Stanley in financial control roles. Mr Savage, 52, will join Standard Life on 18 August and will divide his time between Edinburgh and London.
Mr Savage's basic salary will be £600,000 a year. He could earn an annual bonus of up to 150 per cent of his salary depending on performance, worth a maximum of £900,000 while his salary is £600,000.
Mr Savage could qualify for shares worth up to 125 per cent of his salary under Standard Life's Long Term Incentive Programme. He could receive a maximum of £750,000 shares while his salary is £600,000. LTIP awards would be made depending on performance over a three-year period. They would vest two years after any award is made.
Standard Life said it will compensate Mr Savage for any short term bonuses or long term awards forfeited as a consequence of leaving Lloyd's to join the company.
Ms Hunt was paid £530,000 base salary in 2012 and awarded £733,150 bonuses. She participated in the LTIP scheme.