Aviva pension surplus rises to £2.8bn

Insurance company Aviva’s pension surplus has increased by £0.21bn in six months to total £2.78bn, as of June 2019, according to its half-year report.

However, this is £0.19bn lower than the surplus of £2.92bn it posted in June 2018.

Aviva said that the six-month increase was primarily driven by employer contributions and remeasurements recognised in other comprehensive income.

These remeasurements were principally a result of positive equity and property performance in the UK, as well as falling interest rates. This was partly offset by narrowing corporate bond spreads.

Scheme assets totalled £19.5bn, following a six-month increase in value of £1.39bn, while liabilities totalled £16.7bn, up by £1.2bn from December 2018.

Aviva also incurred a charge of £0.06bn relating its UK defined benefit scheme as a result of the requirement to equalise members’ benefits following the High Court ruling on guaranteed minimum pensions.

Commenting on the report, Aviva interim chief financial officer, Jason Windsor, said: “In the first half of 2019, Aviva delivered steady results in what was a challenging period in terms of the macroeconomic and political backdrop. Equity markets began the year at two-year lows, government 10-year bond yields fell sharply, and investor sentiment remained subdued.

“In UK long-term savings, we have maintained attractive net flows into workplace savings and advisor platform as a result of a solid pipeline of corporate pension scheme wins. The £2.4bn of net flows in HY19 is consistent with the prior period and equated to 4 per cent of opening managed assets on an annualised basis.”

Aviva’s report also that that the company has determined that it can “derive economic benefit from the surplus in the Aviva Staff Pension Scheme (ASPS) via a reduction to future employer contributions for defined contribution members”.

It said that contributions could “theoretically” be paid from the surplus funds in the ASPS.

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