Insurance giant Royal & Sun Alliance hopes to cut its pension deficit by £126m, by making “significant changes” to its main UK pension schemes.
Following discussions with staff and unions, employees in the defined benefit schemes have voted to change from schemes based on final salary to ones based on average career earnings, said the company.
The initiative will have no impact on current pension claimants, deferred scheme members and benefits accrued to active members at the date of change will be protected, it said.
The impact of this change will be to reduce the UK pension fund deficit by about £180m gross of tax, which works out to £126m net of tax.
Royal & Sun Alliance is also replacing its UK deficit funding plan with an accelerated programme, under which the group will contribute £60m net of tax for each of the next three years into the UK schemes.
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These payments do not affect the income statement but tackle the deficit quicker and give greater security to scheme members, the company said.
