Insurer Aviva is planning to close its final salary pension schemes to existing members to try to eliminate a £3bn deficit.
Aviva will begin a 90-day consultation process in June with a view to closing the scheme in March next year.
The move would affect 5,600 Aviva employees and 2,000 staff at RAC, the roadside breakdown division of the company.
Under its proposals, members of the defined benefit schemes will be offered the chance to join a money purchase defined contribution scheme instead from 1 April 2011.
Mark Hodges, Aviva’s UK chief executive, said: “Our proposal would enable us to protect the final salary pension benefits employees have already built up. It would provide a competitive alternative for them and simultaneously reduce the volatile impact of the final salary pension deficit on our business in the long-term.
“It is also crucial that whatever we do is equitable and sustainable for all UK employees, and the current pension arrangements are neither. Our proposals are in keeping with the continuing trend for companies to move to money purchase schemes – these schemes are now the norm, rather than the exception.
“We will 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.”
But trade union Unite has criticised the proposals. Unite national officer for finance, Siobhan Endean, said: “Aviva remains a highly-profitable company and what it has done is stab hard-working staff in the back who could now lose thousands of pounds in pension benefits to live on during their retirement. It is a betrayal as employees regard a final salary scheme as deferred pay for years of loyal service.”
Read more stories on occupational pensions