THE clergy pension might be restored to two-thirds of pensionable stipend, at a value of £900 million, if proposals published yesterday by the Archbishops’ Council are approved by the General Synod.
The proposed changes, which follow extensive campaigning by clergy (News, 14 March), would profit each existing and future pensioners. Those who’ve already retired would see a pension increase reflecting a two-thirds accrual rate since 2011. If adopted in full — including the proposed uplift to the national minimum stipend (NMS) — the proposals would offer a full clergy pension after 40 years of service of greater than £20,000 a yr in today’s money, which, along with a full state pension, would give an income in retirement of greater than £32,000 per yr.
The cost — about £900 million in money terms, paid out over the lifetime of the present scheme membership — might be funded entirely by the pension scheme itself, reflecting recent strong investment performance and more favourable market conditions. No net cost to dioceses is anticipated.
The proposals follow a review of clergy stipends and pensions requested by the Synod last yr (News, 1 March 2024). The motion — carried unanimously — called on the Archbishops’ Council, the Pensions Board, and the Church Commissioners to “work along with dioceses to explore ways wherein the extent of clergy pensions and stipends could be improved in a sustainable manner”. This was an amendment to a non-public member’s motion from the Revd Dr Ian Paul, which called for the restoration of the clergy pension to its pre-2011 profit level “as soon as possible”.
In 2011, the extent of pensions profit was reduced from two-thirds of the NMS to half. The length of service which it takes to accumulate a full pension under the scheme was increased to 41.5 years from 40, and the traditional pension age was increased to 68 from 65 (News, 16 July 2010). Under the brand new proposals, length of service will return to 40 years.
Dr Paul, a member of the Archbishops’ Council, has welcomed the package as “the fruit of a few years of campaigning”, which “puts right a serious injustice”.
Another Archbishops’ Council member, the Archdeacon of Liverpool, the Ven. Dr Miranda Threlfall-Holmes, said: “Nobody is in ministry for the pay, however the covenant the Church makes with clergy is that they ought to be freed by the stipend from financial stress. In recent years this covenant has been straining on the seams, and 1000’s of clergy have been asking for the restoration of the historic two-thirds pension, which this package now effectively provides.
“I hope they feel heard today, and I pray that Synod will approve these proposals whole-heartedly in July, in order that we are able to begin to extend pensions already in payment as soon as is feasible.”
The package represents a major shift from the October 2023 response of the Archbishops’ Council’s Secretary General, William Nye, to Dr Paul’s motion. This cited the conclusion of the Clergy Remuneration Review, published in 2021, that “the present level of pension (when combined with the state pension) is adequate” (News, 25 June 2021).
Mr Nye also mentioned the dimensions of diocesan deficits as an element affecting the affordability of implementing Dr Paul’s request. While the pension scheme before 1998 was an unfunded scheme, whose liabilities were met by the Church Commissioners, the Church of England Funded Pensions Scheme (CEFPS) is funded by contributions from the dioceses and other participating responsible bodies, akin to theological colleges.
Mr Nye warned that increasing advantages in respect of all service since 2011 would require specialist legal and actuarial advice, estimated to cost no less than £100,000, and would take “years” to implement due to their complexity.
A Pensions Board paper on the time warned that retrospective changes could be “highly complicated, and can have unintended consequences”, including the potential for private tax liabilities for members.
The chair of the Archbishops’ Council’s Finance Committee, Carl Hughes, an accountant by training, said that Mr Nye had been “right to be cautious”. But, for the reason that debate, the triennial actuarial valuation of the scheme had been carried out, underlining that the Pensions Board had done a “superb job” of managing the scheme’s assets, Mr Hughes said, and had exceeded his expectations.
A latest paper from the Pensions Board recalls “serious challenges” within the scheme within the aftermath of the Global Financial Crisis of 2008 and subsequent years of “ultra-low rates of interest” and gilt yields “well below historic norms”, increasing the estimated cost of meeting pension guarantees.
But circumstances at the moment are “more favourable”, it says. Most importantly, the funding deficit within the CEFPS was eliminated from January 2023, consequently of strong investment performance (eight per cent on average over the past 20 years), support from dioceses, and changes in market conditions (News, 18 February 2022). The scheme had been in deficit at each valuation since its creation in 1998. The rate of contributions asked of dioceses has fallen from 40 per cent to 22 per cent of pensionable stipends.
The latest proposals would require changes to the scheme rules, which might be put to the Synod in July, with potential implementation after April 2026.
They will form a part of a wider package recommend within the wake of the Diocesan Finances Review. Proposals already presented, including the abolition of the diocesan apportionment, are expected to enable diocese to fund a rise within the NMS to meet up with inflation since 2011, calculated to face at £32,000 in April 2026 (News, 31 January 2025). This would raise the starting pension, which, it’s proposed, might be based on the NMS of the present relatively than the previous yr.
The final version of the package might be published in the subsequent few weeks. If approved, it might represent “a sea change each in clergy well-being and as to the broader programme of simplification of the national church funds”, Mr Hughes said.
