Cancer Research UK has closed its defined benefit pension scheme to future accruals, the charity has announced in its latest accounts.
The charity reported an income of more than £635m in accounts for the year to March 2015, of which £14.1m was an exceptional gain because of the decision to close the pension fund.
A defined benefit pension fund involves a charity committing to make payments of a certain level to members when they retire. Most charities have closed theirs because the schemes have proved too expensive and risky.
The CRUK defined benefit pension scheme was closed to new members in 2009. It has now said existing members cannot build up their contributions further.
A consultation on closure to new members was announced in the last set of accounts, and the charity told members it would close the scheme in July 2014.
The charity continues to maintain a defined contribution pension scheme, which allows individuals to build up a pension pot but does not commit to a minimum payment.
Ian Kenyon, chief financial officer at Cancer Research UK, said: “Cancer Research UK closed its defined benefit pension scheme, the Cancer Research UK Pension Scheme, to future contributions and future accrual on 31 March 2015.
“This follows a general trend with organisations moving away from defined benefit schemes due to their inherent financial risk, and switching to pension arrangements on a defined contribution basis.
“The closure of the pension scheme to future accrual has reduced future obligations as accruals are no longer being made for employees’ future service. This results in a gain recognised in the accounts.”
Several different methods exist to value a charity’s pension surplus or liability. An actuarial review of the charity’s pension scheme in March 2012 found a £61m deficit. However the charity’s valuation according to FRS 17, an accounting standard, showed it has a surplus.
The charity’s total pension liabilities are £565m, and its assets are £610.7m, according to its latest set of accounts.
“We account for pensions in accordance with the relevant accounting standard,” a spokeswoman for the charity said. “Closing the scheme to future accrual reduces our long term liabilities which generates the £14.1m gain.
“Other movements in the assets and liabilities through the year have also generated a further gain. These two gains cannot be recognised in the charity’s accounts under the terms of the accounting standard and they have therefore been treated as a loss of £25.9m in the statement of financial activities.”
