Aviva follows Aon in overhauling annuity scheme

Aviva has joined Aon in making changes to its social security scheme to ride out the credit crisis and recession.

According to a document in The Times, around 15,900 Aviva staff will no longer service perquisites from a defined contribution (DC) scheme that has been completely unconstrained, while thousands of final-salary scheme members will see their contributions ascend.

From July, members of Aviva’s DC pension plan drive have to pay at least 1% of salary to accrue retirement benefits, rising to 2% in April of next year.

Crew who belong to the group’s final-salary pension design (around 7,249 in number) will see their contributions rise from 5% to 10% outstanding two years.

As an alternative, final-salary scheme members can let out 6% of salary but will receive benefits in line with the discount contribution.

The changes at Aviva follow Aon UK’s notification that it is cutting the contribution it makes to employees’ pensions.

The resolve has already closed its final-salary scheme and is now proposing to restrict the level of its employer contributions from 12% to 6%.

In late days Aon has also published figures illustrating the damage caused at near the credit crisis to the private pension pots of 3.7 million people in the UK.

According to the insurer, since the genesis of October 2007 defined contribution pension pots in the UK maintain lost 29% of their value.

Over a 17-month period, the full worth of the pension savings fell from £552 billion to £391 billion, marking a wasting of £161 billion.