Aviva shuts pension scheme to 7,600 staff

Aviva will enter into negotiations with 7,600 staff to shut its final salary pension scheme.

The insurer will bring those staff in line with the other 14,000 staff, who are members of the money purchase sections of the pension scheme. Existing contributions will be protected.

A 90 day consultation process begins in June.

UK chief executive Mark Hodges said: “Our proposal would enable us to protect the final salary pension benefits that employees have already built up. It would provide a competitive alternative for them and simultaneously reduce the volatile impact of the final salary pension deficit on our business in the long-term.

“It’s also crucial that whatever we do is equitable and sustainable for all UK employees, and the current pension arrangements are neither. Our proposals are in keeping with the continuing trend for companies to move to money purchase schemes – these schemes are now the norm, rather than the exception.

“We’ll continue to provide our employees with first-class, competitive pension scheme arrangements, and support them with financial education and advice to enable them to plan for their retirement.”

Aviva pension arrangements:

  • 70% of Aviva’s 19,500 UK employees are members of the money purchase section of Aviva’s Staff Pension Scheme (employees can contribute between 2 and 8% of salary and Aviva will contribute between 8 and 14%, depending on the employee’s chosen level of contribution).
  • The remaining employees are members of legacy final salary pension schemes, which are no longer open to new joiners.

RAC pension arrangements:

  • Of RAC’s 4,100 employees, 2,000 people are members of RAC’s final salary pension scheme which is currently open to new entrants.
  • The remaining employees have chosen not to join the RAC final salary arrangement.
  • Because our proposal would introduce a lower minimum employee contribution for the money purchase arrangement than the minimum employee contribution required for the final salary arrangement, it would make access to a competitive employee pension more affordable for the large number of RAC employees who have not previously joined the company arrangements.