Aviva eliminates £1.7bn pension deficit
UK - Life insurance and pension provider Aviva has successfully eliminated its £1.7bn pension deficit, following a number of measures targeted at tackling the burden the funding shortfall placed on the company.
As one of the measures, the company last year announced the closure of its defined benefit (DB) schemes for both Aviva and RAC, with a new defined contribution (DC) scheme set to take its place and opening next month.
At the time, the company argued the closures would bring greater equality to pension arrangements across the entire workforce, as well as reduce its funding volatility.
Releasing its preliminary year-end results, Aviva said eliminating the deficit left it with a stronger balance sheet that would allow continued growth.
At the end of 2009, its final salary scheme reported a deficit of £1.7bn.
However, due to the scheme's closure, as well as recovering equity markets, it has seen its fortunes improve.
The company credited the scheme's recovery as one of the reasons for a net asset value per share increase of 21% year-on-year to 454p.
Of its shift from DB to DC, it added: "This reduced the pension fund deficit, benefiting Aviva's net asset value by approximately £286m and reducing future funding costs by £50m per year."