Aviva to close final salary pensions

Aviva has today unveiled proposals to close its final salary pension scheme, affecting 7,600 staff.

Aviva has today unveiled proposals to close its final salary pension scheme, affecting 7,600 staff.

The company is set to launch a 90-day consultation with employees over the planned shakeup, which will protect all final salary benefits that staff have already built up but close the scheme from April 1 2011.

From that date all UK staff will be offered money purchase arrangements, under which the employee contributes a percentage of their salary to the pension which is matched or exceeded by the company.

Aviva said the move would 'reduce the potential financial risk' associated with the cost of funding the final salary scheme while securing a sustainable and competitive pension arrangement.

The final salary scheme takes up two thirds of the company's contributions to pensions but is currently enjoyed by only about one third of staff, which the company said was 'inequitable and unsustainable'.

Currently about 14,000 UK staff at Aviva and RAC are members of the money purchase sections of the company's pension schemes and approximately 7,600 have final salary arrangements.

Mark Hodges, Aviva UK chief executive, said: '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.'

The company employs about 6,000 in Norwich.