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Impact Investing

IPE special report May 2018

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Aviva in €1bn move to plug pension deficits

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UK – UK insurance and pensions giant Aviva has made, or is planning to make, an extra £700m (€1.01bn) in extra contributions to shore up its own £1.4bn pension deficit.

It said it would make a contribution of £540m into the Aviva Staff Pension Scheme over the next two years. And it made a one-off payment of £160m into the main scheme of roadside assistance division RAC during 2005, its annual report reveals. The moves would “bring total additional contributions into the two schemes to £700m”.

It would make total employer contributions to its schemes in 2006 of £259m, excluding the deficit funding contributions.

Scheme assets were worth a total £8.2bn, with liabilities of £9.68bn leaving a deficit of £1.4bn.

The company also disclosed that it has cut its discount rate assumptions and the expected rate of returns for its pension assets.

The discount rate for its UK plans was cut to 4.8% from 5.4% a year earlier. The rate was cut to 4.0% from 4.5% in its Dutch schemes.

The expected rate of return for its £4.25bn UK equities portfolio was cut to 8% from 8.2%. The £1.66bn bond portfolio’s expected return was cut to 4.45% from 4.8% and property to 5.95% from 6.0%.

Last week Aviva withdrew its £17bn (€24.6bn) all-share offer for rival Prudential – just four days after the proposal was announced.

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