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The Chartered Institute of Personnel and Development (CIPD) has announced future plans for its employee pension scheme.

The existing scheme is a defined benefit pension, eligible to all employees after six months service. However, it suffers from two major shortcomings:

• Unpredictable swings in liabilities due to external factors such as changing actuarial assumptions, investment performance, regulatory changes – leading to frequent calls for substantial cash injections that cannot be planned or budgeted for.
• Low levels of take-up, particularly amongst lower paid members of staff – only 55% of current CIPD staff are members of the existing generous pension scheme.

The announcements, all subject to consultation with CIPD staff and the pension scheme trustees, include:

• The decision to close the existing defined benefit pension scheme to new members from January 2010.
• Giving advance notice to all staff of an intention to consult on the closure of the current defined benefit pension scheme to future accruals for existing members from 2012.
• Establishment of a new defined contribution scheme to replace the defined benefit scheme, which will offer more flexibility for employees to decide the levels of their own contributions, and will see employee contributions more-than-matched by employer contributions that rise with employees’ own contributions. The new scheme will be in operation from January.
• The intention to secure independent endorsement of the new CIPD defined contribution scheme by ensuring it is among the first employer schemes to secure the recently announced “kitemark” from the National Association of Pension Funds.

Jackie Orme, CIPD Chief Executive, said:

“We have two clear objectives in making these changes, and we won’t judge the move a success unless both are achieved. Firstly, we need to take control of the current and future pensions liabilities of the CIPD to ensure we are not facing potentially unmanageable risks that could undermine our business and the service we provide to members in the future. But secondly, we are determined to significantly increase the numbers of our staff who are members of a CIPD pension scheme and to encourage more saving for retirement. We are not happy with a situation where our own pension scheme only attracts 55% of our employees to join it. Through the new scheme we are aiming to significantly increase the proportion of our staff saving for their retirement.

“The new scheme will cost us more on a day to day basis than the old scheme, even before we take into account our commitment to increasing membership of the scheme. If we achieve our objectives in encouraging more employees to join it, day to day costs will rise even further. We are clear that this is an investment worth making to ensure we have a scheme that acts to attract and retain the talent we need to meet our business objectives. But CIPD members can also be reassured that the new scheme offers greater stability, and removes the potential for our financial position to be undermined in the future by unfunded pension commitments.

“This is a challenge facing many members of the CIPD when making decisions about defined benefit pension schemes in their own organisations. We have set out to demonstrate best practice in resolving our own challenges. We are clear that the pension is an important part of the reward package we offer to people working at CIPD, and are determined that this will remain the case into the future.”

Ends

Notes to editors:

• The CIPD defined benefit pension scheme requires an employee contribution, via a salary sacrifice mechanism, of 6%, with employer contributions currently at 11.6%.
• The proposed new CIPD defined contribution scheme will offer employees the opportunity to contribute 4%, 5% or 6% of their salary, with employer contributions more than matching their own contributions at 6%, 8% or 10% respectively.
• The NAPF recently announced a “kitemark” for employer pension schemes, in the form of their Pension Quality Mark. We will be seeking to be among the first to secure this kitemark for our new scheme. More details are available at www.pensionqualitymark.org.uk
• The Chartered Institute of Personnel and Development (CIPD) is Europe’s largest HR and development professional body with over 135,000 members, supporting and developing those responsible for the management and development of people within organisations

CIPD Press Enquiries

Robert Blevin / Gregor Ridley / Jemma Walsh

Tel: 020 8612 6400

Email: press@cipd.co.uk

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Written by PayPerShop.com - or reproduced on behalf of the company supplying the above information.

Filed under: Press Releases on October 19th, 2009

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