Currently employees at the HR industry body allows all employees to join the DB scheme after six months' service but plans to close the scheme next year due to unpredictable liabilities and low levels of take up as just over half (55%) of staff are currently members of the scheme.
The organisation will close the existing scheme to new members and give 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.
It is hoped the DC arrangement 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 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 (pictured), said: "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 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.
"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."
