Aviva 2007 Annual Report Download - page 202
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Please find page 202 of the 2007 Aviva annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.46 – Pension obligations continued
(b) Membership
The number of scheme members at 31 December 2007 was as follows:
UK Netherlands Canada Ireland
Number Number Number Number
Active members 10,532 5,048 4,192 821
Deferred pensioners 53,953 5,015 620 830
Pensioners 27,176 2,815 2,597 674
Total members 91,661 12,878 7,409 2,325
(c) Main UK scheme
In the UK, the Group operates two main pension schemes, the Aviva Staff Pension Scheme (ASPS) and the smaller
RAC (2003) Pension Scheme. New entrants join the defined contribution section of the ASPS, as the defined benefit
section is closed to new employees. This scheme is operated by a trustee company, with 11 trustee directors, comprising
representatives of the employers, staff, pensioners and an independent trustee (referred to below as the trustees).
(i) Defined benefit section of the ASPS
The Company works closely with the trustees who are required to consult it on the funding of the scheme and its
investment strategy. Following each actuarial valuation, the Company and the trustees agree the level of contributions
needed. At 31 March 2006, the date of the last actuarial valuation, this section of the scheme had an excess of obligations
over available assets, on a funding basis, of £1,019 million (31 March 2005: excess obligations of £888 million).
The Company has agreed with the trustees a funding plan through to March 2014, over which it will aim to eliminate
the funding deficit. Funding levels are monitored on an annual basis.
The employing companies’ contributions to the defined benefit section of the ASPS throughout 2007 were 37% of
employees’ pensionable salaries, together with the cost of redundancies during the year, and additional deficit funding
payments totalling £83 million. As this section of the scheme is closed to new entrants and the contribution rate is
determined using the projected unit credit method, it is expected that the percentage cost of providing future service
benefits will continue to increase as the membership ages, leading to higher pension costs, and the number of members
falls, leading to a higher charge per member. The employers’ contribution rate for 2008 has therefore been increased to
39% of pensionable salaries (expected to be £114 million), pending finalisation of the April 2007 valuation. The Group is
also expecting to make further contributions of £320 million into the ASPS prior to March 2008 and £49 million later in
the year. Active members of this section of the ASPS contribute 5% of their pensionable salaries.
For funding purposes, the scheme’s valuation as at 1 April 2007 is currently being completed, with the obligations
calculated using the Projected Unit Method (which is described below).
In 2006, the Group’s UK life business carried out an investigation into the allocation of costs in respect of funding the
ASPS, to identify the deficit that arose in respect of accruals prior to the introduction of the current management services
agreements (MSAs) and to propose a split between individual product companies based on an allocation of the deficit into
pre- and post-MSA amounts. The results of this review were updated during 2006 and agreed by the relevant company
boards and accepted by the UK regulator. Consequently, with effect from 1 January 2006, the Company’s UK with-profit
product companies are liable for a share, currently 12%, of the additional payments for deficit funding referred to above.
This resulted in a transfer of £130 million from the unallocated divisible surplus (UDS) to the income statement in 2006,
to reflect the position at the start of that year, and a movement of £61 million in 2007 (2006: £30 million) back to the
UDS via the statement of recognised income and expense to reflect actuarial movements in the deficit during the year and
therefore a change in the amount recoverable from the with-profit product companies.
For funding purposes, the scheme’s valuation as at 1 April 2007 is currently being completed, with the obligations
calculated using the Projected Unit Method (which is described below).
(ii) Defined contribution (money purchase) section of the ASPS
The trustees have responsibility for selecting a range of suitable funds in which the members can choose to invest and
for monitoring the performance of the available investment funds. Members are responsible for reviewing the level of
contributions they pay and the choice of investment fund to ensure these are appropriate to their attitude to risk and their
retirement plans. The employers’ contribution rates for members of the defined contribution section throughout 2007
were 8% of pensionable salaries, together with further contributions up to 4% where members contribute, and the cost
of the death-in-service benefits. These contribution rates are unchanged for 2008.
Aviva plc
Annual Report and
Accounts 2007
198
Financial
statements
Notes to the consolidated financial statements continued