The Chartered Institute of Personnel and Development (CIPD) is to close its final salary pension scheme to new members in January 2010 and for existing members from 2012 as part of its strategy to put the organisation on a firmer financial footing.
A defined contribution (DC) scheme will be launched in January, with more staff encouraged to join. Currently only 55% of CIPD staff – who are eligible to join after six months’ service – are members of the more generous final salary scheme.
CIPD bosses said the existing defined benefit scheme was subject to unpredictable swings in liabilities which could give rise to a need for “frequent substantial cash injections that cannot be planned or budgeted for”.
Under the new scheme, employees will contribute between 4% and 6% of salary, with employer contributions set at between 6% and 10%. Under the old scheme the employer contribtion was 11.6%.
CIPD chief executive Jackie Orme said: “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.”
However, the move is likely to put further strain on employee relations at the institute following negative publicity about chief executive Jackie Orme’s performance bonus, a staff-wide pay and reward freeze, and tens of redundancies earlier this year.
CIPD employees contacted Personnel Today to express their anger at Orme’s decision to accept the bonus payments.
The CIPD also announced the £3m acquisition of consultancy Bridge Partnership last week.