Aviva ends non-contributory part of DC scheme
UK - Aviva has confirmed members of its UK defined contribution (DC) scheme will have to start paying a minimum of 1% from July, rising to 2% in April 2010.
The insurer said the changes were designed to ensure the pension scheme is "more than just adequate" and said the maximum employer contributions will also rise from 12% to 14%.
The scheme is currently non-contribuutory and 15,900 members receive 8% from Aviva. Under the new contribution scale, however, members need to pay between 1-3.5% of pensionable salary to get the employer's 8% contribution.
The employer contribution will increase to 10% for employee contributions of between 4-5.5% and to 12% for member payments of between 6-7.5%, while those members contributing 8% will receive the maximum of 14%, equating to a total 22% contribution to the DC scheme.
A spokesman for Aviva said the scheme had been under review for "some time" and stressed the changes had not been driven by the recent financial downturn, although he added Aviva had recognised it has a "responsibility to encourage a sensible level of pension saving among its staff".
Meanwhile, the 7,249 members of the company's defined benefit (DB) scheme - valued at £9.3bn (€10.3bn) and with a deficit of £628m at the end of 2008 - are also being asked to increase their contributions or switch into the DC scheme.
Members have been given three options by Aviva: they can either double their contribution level from 5% to 10% by April next year, with an interim increase to 7.5% from 1 July 2009; they can increase payments from 5% to 6% from July but face reduced future accrual, or they can switch to the DC scheme.
The spokesman said the changes, which have been under discussion since May 2008, "had been designed to give employees flexibility" in their retirement saving as some may not want to pay 7.5% from July.
Aviva's changes to the UK schemes follows confirmation from Aon UK that it is reducing its standard contribution to 6% for all age groups in its money purchase scheme, although it intends to match extra employee contributions up to certain levels. (See earlier IPE article: Aon UK cuts contributions in favour of matching)
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