Aegon in U-turn as it agrees to increase staff salaries

AEGON UK, the life and pensions company, has agreed a pay settlement with staff that will mean reversing its decision not to award a rise next year.

All employees earning a full-time equivalent salary of 25,000 or less will receive a 250 pay increase from 1 January.

This will be paid to eligible part-time employees on a pro-rated basis.

In November, the company proposed not to award an increase in pay to either staff or management from January as it looks for ways of reducing operating costs across the business by 25 per cent by the end of 2011.

It is reviewing all payroll and non-payroll expenditure to achieve the target cost savings.

Aegon's standard practice each year is to negotiate proposed pay awards with Aegis and Unite, the trade unions that represent its staff. Following ballots of staff. Aegis agreed to support the company's proposal, while members of Unite voted to reject the proposal.

But Unite members have now voted to accept the proposal and Aegon has extended the same pay award to all other eligible employees within its life and pensions business.

Human resources director Gill Scott said: "We are pleased to have successfully concluded our pay negotiations. Whilst we are awarding a pay award to lower paid employees, we are still able to deliver considerable cost savings for the organisation."