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Aviva scraps free staff pension

Aviva is to end its free pension for 16,000 staff and will be asking all members to start contributing from July.

This comes after news that Aon is slashing contributions to its employee pension by up to half and has sparked warnings from leading pension commentators that this could set a precedent for other firms to reduce their pension scheme contribution levels.

The members of Aviva’s defined contribution scheme have not had to make any contributions but as of July they will have to pay 1 per cent of their salary into the scheme.

From April 2012, members will have to pay in a minimum of 2 per cent.

Aviva will increase its maximum contribution from 12 per cent to 14 per cent. Staff who contribute 8 per cent of salary to the scheme will be eligible for the maximum 14 per cent contribution.

The 7,249 members of its final-salary scheme are also being asked to increase their contributions from 5 per cent to 10 per cent over a period of two years or choose to leave the scheme.

Aviva says the move has been planned for months and that the decision has not been taken as a direct result of the declining economic conditions.

Aviva spokesman David Ross says: “We announced this to staff a while ago. I would be very surprised if we were alone in having done what we’ve done.

“It has not really been about what has happened in the past six months or so. It is a much longer term issue. It is part of a much broader issue around people planning for their retirement.”


Cautious bull

First up, I do apologise for focusing on corporate bonds for the second time in a month – not least because such questionable practice almost certainly contravenes some part of the Geneva Convention. However, it would appear I only gave you half the picture when we touched on the subject last month.


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