'Callous' Aviva slammed over plans to axe 2,000 and cut pay-off levels

Aviva is to make 2,000 of its staff redundant in the next six months as its new chief executive Mark Wilson moves to slash costs.

Giving employees the news, the insurer also warned that future redundancy payments will be less generous than they are at present.

The job losses – across the group in the UK, Europe and Asia – equate to 6 per cent of the global workforce. They come on top of many thousands of other staff cuts made by the group over the years as it battled to makeitself streamlined.

Mr Wilson said: "I know this is difficult news for our employees but these changes are essential if we are to remain competitive. Aviva needs to become a more efficient and agile organisation to unlock its potential.

"We must take tough decisions on costs to provide our customers with great value products and ensure our future success. I am determined that Aviva gets through this phase of our business transformation as quickly as possible."

Unions, however, expressed anger. Unite's national officer, Dominic Hook, said: "Once again, finance staff are being forced to pay the price for boardroom failure. Aviva has also announced plans to slash redundancy pay, with longer-serving staff losing more than a quarter of their entitlement. To cut redundancy pay so drastically when there is deep uncertainty over job security is a callous and disgraceful act.

"Since the departure of CEO Andrew Moss less than 12 months ago, the UK workforce, which is the backbone of the company, has suffered job cuts, pay freezes and now faces an attack on their redundancy terms, when the company is planning more cuts. Unite will give staff all the support possible to oppose any job losses in the UK and the cuts to redundancy terms."

Formed from a messy merger of Norwich Union, General Accident and Commercial Union, Aviva has had a rough few years. Mr Moss lost the confidence of the City and was ousted last year.

The company said the job cuts are "part of a programme to reduce expenses across the whole business, including substantial non-people related savings". It is aiming to cut costs by £400m overall.

The "revised" redundancy terms, which do not apply to those who lose their jobs in this round, will see payouts reduced from four weeks' wage for every year of service to just two. The amount will be capped at 78 weeks. Aviva claims these new terms are more in line with what is typical elsewhere.

The company swung to a loss of £3bn in the last year, largely because of a huge writedown it took on the sale of its struggling US business. In light of the losses, it took the decision not to pay any executive bonuses for the year. It also slashed its final dividend by 27 per cent, a move that sent the shares tumbling when it was revealed.

Mr Wilson admitted at the time that the dividend payment was unsustainable given the paucity of cashflows. The shares were down 0.9p at 294.1p. Back in 2008, they were well over 600p.

Analysts say the company has done poorly compared with its arch-rival the Prudential.

The Pru has made Asia the focus for its expansion while Aviva targeted European markets.

Aviva employs 31,200 people worldwide – 18,500 of whom are in the UK – and provides 34 million customers with insurance, savings and investment products.

It said it will consult with unions about the job cut. It "will provide further information to its people on role reductions as soon as the detail is available".

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