Overview
Despite the increasingly tough economic conditions the Institute’s total income for the year grew over 10% to £39.4 million. Members’ subscriptions continued to make up over one-third of the total. The turnover from the Institute’s commercial activities, which are operated through our wholly owned subsidiary CIPD Enterprises Limited, was particularly robust and exceeded £20 million for the first time.
Our total expenditure was £38.5 million. Our commercial activities accounted for £17.4 million, with the remainder spent directly by the Institute to provide high-quality services to members and to the wider community of employers and managers.
The Institute continues to be well funded and met the target of keeping sufficient reserves in the general fund to meet at least one year’s operating costs. We also ensured that member benefits, services and related support costs were fully funded from member subscriptions. We have a policy of keeping £1 million in cash and readily available funds at any given time.
The general fund at 30 June 2008 was £24.5 million after deducting the pension liability. We also keep reserves as designated funds, which are set aside for specific future investment. The expenditure from these funds was £3.3 million during the year and the total funds remaining at the end of the year were £4.4 million.
The pension scheme deficit as determined by the actuary at 30 June 2008 under FRS 17 regulations showed an increase from £2.1 million to £7.1 million, having decreased by £5.2 million over the previous two years. This is consistent with similar experiences of other pension funds over the last year and reflects higher assumptions prevailing at 30 June 2008 for long-term inflation, the impact of expectations of higher life expectancy and the performance of the scheme’s investments over the year. Partly offsetting these factors was the movement in high-quality corporate bond yields, which increased the rate used to discount future liabilities.
During the year the Institute implemented its revised investment strategy. In order to exercise more control over asset allocation we now use specialist managers for each class of asset. The Institute seeks to maximise the investment return on assets while not investing in any assets that could put it at significant risk. Though the unrealised loss on investments for the year was £1.1 million, this fall was limited due to the success of the revised strategy in investing in a wider range of asset classes. The market value of our investments at the end of the year was £20.1 million and our investment advisers calculated that the portfolio’s performance over the year beat the relevant blended benchmark by 1%.