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Friday 25th of May 2018
April 10, 2009

Aviva follows Aon in overhauling pension scheme

by Gill Montia

Story link: Aviva follows Aon in overhauling pension scheme

Aviva follows Aon in overhauling pension scheme Aviva follows Aon in overhauling pension scheme

Aviva has joined Aon in making changes to its pension scheme to ride out the credit crisis and recession.

According to a report in The Times, around 15,900 Aviva staff will no longer benefit from a defined contribution (DC) scheme that has been completely free, while thousands of final-salary scheme members will see their contributions rise.

From July, members of Aviva’s DC pension plan will have to pay at least 1% of salary to accrue retirement benefits, rising to 2% in April of next year.

Staff who belong to the group’s final-salary pension scheme (around 7,249 in number) will see their contributions rise from 5% to 10% over two years.

As an alternative, final-salary scheme members can pay 6% of salary but will receive benefits in line with the lower contribution.

The changes at Aviva follow Aon UK’s announcement that it is cutting the contribution it makes to employees’ pensions.

The firm has already closed its final-salary scheme and is now proposing to reduce the level of its employer contributions from 12% to 6%.

In recent days Aon has also published figures illustrating the damage caused by the credit crisis to the private pension pots of 3.7 million people in the UK.

According to the insurer, since the beginning of October 2007 defined contribution pension pots in the UK have lost 29% of their value.

Over a 17-month period, the total worth of the pension savings fell from £552 billion to £391 billion, marking a loss of £161 billion.

 

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