A BID to revive the clergy pension to pre-2011 levels might be made at General Synod this month.
A Private Members’ Motion from the Revd Dr Ian Paul (Southwell & Nottingham), requests that the Archbishops’ Council, the Pensions Board, and the Church Commissioners “work together to search out a method to make use of the entire range of assets and resources across the Church to enable the restoration of the clergy pension to its pre-2011 profit level as soon as possible”.
In 2007, the Synod voted to approval a change within the “accrual rate” for the Church of England Funded Pensions Scheme, in order that the total pension was only gained after 40 years’ service moderately than 37 (News, 13 July 2007). The motion requested the Archbishops’ Council, “within the event that the pensions climate improves sufficiently, to bring forward recommendations to the Synod, after consultation with the Pensions Board and the Church Commissioners, with a view to restoring pension levels.”
Dr Paul notes further changes to the scheme: in 2011, the accrual rate was prolonged to 41.5 years, the conventional pension age was increase to 68 from 65, and the pension was reduced from two-thirds of the National Minimum Stipend (NMS) to half (News, 16 July 2010). He writes: “This lack of pension has been further compounded by the regular erosion of the NMS compared with average pay. We are actually in a situation where many retired clergy are facing situations of real hardship.”
Noting the straitened circumstances of diocesan funds, he suggests that it will “not be appropriate to ask for extra contributions from them”. Citing the “significant growth in the general assets of the Church as a complete”, he looks as a substitute to the Church Commissioners, having calculated that the annual cost of restoring the clergy pension can be 0.25 per cent of their asset base. “This is a change we are able to make; it’s one we must always make; and given the general position, it’s now one we must make,” he writes.
The secretary-general, William Nye, has responded with a note citing the 2021 Clergy Remuneration Review, which concluded that “the present level of pension (when combined with the state pension) is adequate”, declined to make recommendations to extend the extent of advantages on affordability grounds (News, 25 June 2021).
While Mr Nye’s note acknowledges that, within the last yr or so, “there are reasons for pondering that the pensions climate has improved” — the Church’s pension scheme is in surplus for the primary time, and the Pensions Board has reduced the contribution rate for dioceses (News, 9 February) — it warns that “the economic climate and its impact on church funds has also modified”. Diocesan boards of finance recorded aggregate deficits of around £100 million between 2019 and 2022 and aggregate deficits of at the least £40 million are forecast for 2023 to 2025.
Mr Nye’s note accommodates attempts to calculate the associated fee of reverting to the pre-2011 profit in two scenarios: applied in respect of future service only (“comparatively straightforward”, based on a technical note) and applied retrospectively (requiring specialist legal and actuarial advice).
In the primary scenario, it’s estimated that diocesan boards of finance would should make additional annual contributions of between £25 million and £35 million. This, it’s estimated, would increase their forecast aggregate deficits by around 75 per cent, “unless mitigated by additional income, for instance a rise of around 10 per cent in parish-share contributions, or expenditure reductions which could include reigning back on plans for other elements of the clergy remuneration package akin to stipend increases, housing provision or Continuing Ministerial Education.”
In the second scenario, it’s estimated that the pension scheme’s liabilities would increase “by somewhere within the region of £0.6 billion to £0.7 billion . . . requiring a recent deficit recovery plan to be put in place and increasing the chance of volatility of contributions that might be required following future valuations.”
The note states that “it’s the obligation of Responsible Bodies [DBFs] to make the required contributions into CEFPS”. It defends the Church Commissioners’ track record in distributions and warns that, “any additional calls on Commissioners funding would have to be matched by reductions in other planned expenditure”.
The Church Commissioners were wholly answerable for clergy pensions until 1998. (They retain responsibility for clergy pensions earned in service until the tip of 1997.) Speaking at a press briefing at Church House on Friday, Mr Nye acknowledged that it “can be possible to alter the law as to where that responsibility rests”.
His note also emphasises that clergy can even receive the state pension and calculates that the sum of the 2 advantages together “exceeds the NMS in the bulk, but not all, of the illustrations, but is lower than the National Stipend Benchmark most often”.
A technical note has also been produced by the Pensions Board. This suggests that a rise within the National Minimum Stipend — the reference point for all starting pensions — can be “a mechanically simpler method to augment pension advantages for individuals who haven’t retired”. It also refers back to the introduction within the UK of a “Collective Defined Contribution” pension as a possible future model.
